Ciara Fairley argues that while some of the changes in the Deregulation Act 2015 are welcome, others could pose additional burdens on landlords
The Deregulation Act 2015 (“the Act”), which received royal assent on 26 March 2015, was one of the last acts of the coalition government. It aims to “make provision for the reduction of burdens resulting from legislation for businesses or other organisations or for individuals”. Unfortunately, the Act does not live up to its aims in the field of property law.
The reforms set out in sections 28-48 are those likely to be of interest to property practitioners. Among them are a series of measures aimed at reforming the procedure for recovering possession of property let on assured shorthold tenancies using section 21 of the Housing Act 1988. Section 21 is the only non-fault-based way in which landlords can regain possession, making the effects of any changes to that procedure likely to be widely felt.
Cause for celebration
Some changes are welcome, particularly the Act’s attempts to overhaul the rules relating to tenancy deposits. The legislation relating to deposits was poorly drafted and, although the Localism Act 2011 introduced major amendments to the Housing Act 2004, it did not resolve all the difficulties. As a result, the provisions have continued to trouble the courts.
The current reforms are a direct response to those problems and, in particular, to Superstrike v Rodriguez [2013] EWCA Civ 669; [2013] 2 EGLR 91. Superstrike engendered widespread uncertainty and some of it, at least, has been laid to rest. Section 32 of the Act makes it clear that the landlord is not obliged to re-serve prescribed information when a fixed-term tenancy ends and a statutory periodic tenancy arises, provided that the information was provided previously. This measure is being introduced with retrospective effect, which presumably says something about the importance that parliament attaches to these changes.
These changes will be welcome news to landlords who would have been caught by the previous legislation. It is also unlikely that tenants will be prejudiced by the change: they will still be given the information that parliament says they need; they just won’t be given it twice.
Layer of additional regulation
These measures clearly reduce the burden on landlords and managing agents by reducing the information that needs to be provided before a landlord can recover possession. However, not all of the Act’s provisions live up to their burden-reducing billing. On the contrary, they impose a new and significant layer of additional regulation and are likely to be the subject of extensive litigation in years to come. Section 33 – “Preventing retaliatory eviction” – stands out. It is designed to address the problem of so-called “retaliatory” or “revenge” evictions: cases where tenants are evicted because they have made a complaint about disrepair.
How widespread is this problem? Shelter, which drafted the ill-fated Tenancies (Reform) Bill that foreshadowed section 33, estimates that some 213,000 tenants were the subject of “revenge evictions” last year, though it is not clear how that figure was arrived at or what proportion of cases it represents. In theory, it is possible for a landlord to seek possession out of “revenge”, since a landlord’s motives in seeking possession are irrelevant to a claim for possession under section 21. Ordinarily they can seek possession using section 21 for any reason, so long as they are a private landlord. Public landlords will be subject to public law duties.
What is the solution according to the Act? Section 33 employs two basic devices. The first is to prevent landlords from serving section 21 notices; the second is to make section 21 notices that have already been served invalid. The first device is easy to understand: if you are a landlord, and you have already been served with a specified type of notice relating to disrepair at the property, then you cannot serve a section 21 notice within a specified timeframe. The specified types of notices are called “relevant notices” and they are listed in the Act.
The second device is harder to make sense of. Under section 33(2), there are five separate conditions that, jointly, will render a section 21 notice invalid. Understanding how they each operate is difficult, and understanding how they all fit together is harder still.
Practical difficulties
Two examples may help to make the point. First, the concept of an “adequate response” by the landlord to the tenant’s complaint is of key importance. Although the Act tries to define this concept, it is almost certainly bound to be the subject of litigation. For example, if the tenant’s complaint is groundless, will a response be adequate if it proposes to take no action? Or can a response that proposes to take action, but only over a timescale that extends past the end of the tenant’s tenancy (and thus affords them no practical relief) ever be adequate? And what is the effect of giving an adequate response anyway? Does it leave the landlord free to serve a subsequent section 21 notice irrespective of his motives? Or are his motives still relevant even after this point? There may be answers to these questions, but working them out is bound to clog up the courts system.
The second problem is also practical: how is a court to approach the issue of disrepair at the hearing of the landlord’s claim for possession? A court might not know, at that time, whether or not the local housing authority is going to serve a notice in response to the tenant’s complaint; if such a notice is subsequently served that may invalidate the section 21 notice. What, in those circumstances, is the court supposed to do? Is the only answer to adjourn or can the landlord rely on the fact that, at the date of the hearing, all of the specified conditions were not met? The worry here is that section 33 could be used by unscrupulous tenants, who are merely seeking to frustrate the making of any order and buy themselves additional time, rather than by those who are making a genuine complaint. That is what happened with the tenancy deposit rules and the result was that possession proceedings took longer and cost more.
The wider worry is the effect that the new rules may have on the residential market. Section 21 was introduced because the private rental sector had collapsed in the wake of too much regulation. It would be an unfortunate irony if this was also the effect of the self-styled Deregulation Act.
Ciara Fairley is a barrister at Falcon Chambers
