The Tenancies Reform Bill has now been formally published following its second reading. The Bill has changed substantially from the original version that was put forward by Sarah Teather MP and drafted by Shelter. We commented on the Bill before as we had seen the version produced at first reading. The Bill has now benefitted from the gentle caress of the Parliamentary Draftsman’s office so it looks entirely different.
The Bill is slightly inaccurately named. It is primarily a reform of s21 of the Housing Act 1988 and only in respect of the private rented sector. It is primarily concerned with preventing the giving of a s21 notice within 6 months of a complaint of disrepair in the property, which is perceived as the most common disrepair scenario.
Therefore, where a tenant has made a complaint about the condition of a property either to the landlord in writing or to the local authority then it is not permissible to give an s21 notice for a period of 6 months unless the landlord can convince the Court that the complaint was “totally without merit”. Where the tenant has made a complaint and the local authority has then served a Hazard Awareness Notice, Improvement Notice, or carried put emergency remedial action under the HHSRS it will then any s21 notice served between the complaint being made and the local authority action being taken will be invalidated. It will also be a defence to possession proceedings to show that a complaint was made to a landlord or local authority and that the local authority have yet to inspect the property or make a decision on whether to take action under the HHSRS. Where a notice under the HHSRS has been revoked because the work has now been done or the decision to take action has been quashed by the Tribunal then the defence will not exist and there will be no restriction on s21 at all.
This structure is a change from the original Bill, which also allowed for written tenant complaints to be taken into account on their own without a specific notice from the local authority.
There is also a generic power for further requirements to be prescribed around the condition of the property and its energy performance and failure to comply with these will prevent the giving of an s21 notice in England.
The Relationship with the Disrepair Obligation
Landlords are of course obligated to keep a property in repair in accordance with s11, Landlord & Tenant Act 1985. However, this is a civil duty which gives the tenant a right to claim money from the landlord and does not protect them against eviction, unless it is used as a defence to a claim for rent arrears. It is also worth noting that the HHSRS requires a higher standard than s11. In my experience, while many tenants do want compensation for disrepair this is more prevalent in the more mobile parts of the market. Other tenants will be more attracted by the repair being done and being able to stay in the property. To some extent this may be the death knell for s11 in England. In Scotland and Northern Ireland there is already a far higher standard and Wales seems set to adopt a higher standard as part of the Renting Homes Bill. These changes may see England effectively doing the same thing as most landlords will be very wary of losing their ability to recover possession under s21.
Other S21 Changes
The Bill alters s21(4)(a) to remove the obligation that the notice must expire on the last day of a period of the tenancy in England only. Therefore the notice must now merely be 2 calendar months and not less notice than a common law notice to quit. This will mean that the line of cases involving saving provisions such as Lower St Properties v Jones are now irrelevant. However, given the changes wrought by Spencer v Taylor and the oddness of removing the end of period provision but not the NtQ provision it might have been easier all round to simply get rid of s21(4)(a) altogether.
Time Limits for S21
The Bill will also insert new time limits on s21. The most important is a ‘use it or lose it’ provision which states that proceedings may not be commenced once a period of 6 months has passed from the date that the s21 notice was given to the tenant. This must be an error. The original bill specified a period of 6 months from the date the notice expired. Given that s21(4)(a) notices retain the requirement that a notice must not give less notice than a common law notice to quit then, following Church Commissioners v Meya, some s21(4)(a) notices could require notice periods of up to half a year. These provisions would make the giving of notice impossible in some situations.
There are also restrictions on the date in which the notice can be given. It will not be permissible in England to give an s21 notice for 4 months after the start date of the tenancy or four months from the date of a renewal. These provisions will not apply to statutory periodic tenancies. I do not see the purpose of these provisions to be honest and it seems to be an unnecessary obstacle which will end up causing difficulty.
S21 Notice Form
There is a new requirement for an s21 notice to be a prescribed form in England and this will no doubt become available soon.
One of the unexpected additional changes to s21 deals with apportionment of rent. Again this applies to England only. This requirement states that where a landlord gives an s21 notice part way through a rental period then he is obliged to apportion the rent on a daily basis for the remainder of that period. Apportionment only applies to rent paid in arrears so this issue has been a complaint of tenants for some time. However, this change will only have limited effect. It will not apply to any form of agreed surrender for example and will not apply where a tenant gives notice under a break clause. I am not clear how many tenants are actually affected by this problem but some will not doubt be pleased. Where proceedings for possession are taken using s21 then the Court is empowered to make an order requiring a payment in respect of apportioned rent where the landlord has not already made this payment themselves.
There is still some way for this Bill to go. It may well be amended at various stages of its progress. Given the current political situation one assumes that the Government will seek to move it on rapidly in order to have it passed prior to the election in 2015. The changes will not apply to tenancies that are in place at the time the Bill is implemented. They will not apply to any statutory periodic tenancy that arises from those tenancies either although they will probably apply if the tenancy is renewed. However, three years after the provisions come into force they will automatically begin to apply to all tenancies, even those that began before the Act was passed.
This Bill is, IMHO, a bit of a mess right now. I am not suggesting that retaliatory eviction should be allowed, far from it. It should not. However, this is a very untidy and bureaucratic way of dealing with the issue which takes no account of the work being done by local authorities and the pressures they face. Currently local authorities are poorly resourced in terms of their ability to do HHSRS assessments. These also take a skilled officer some time to do properly and they are not an easy thing to do well as the fairly large number of appeals, not all of which have gone well from the local authority point of view, will attest to. Therefore I am not sure they will welcome the potential massive increase in the volume of inspection requests from tenants. I also don’t’ see how they will service the requirement. Additionally, I think that a lot of private sector landlords will be horrified by what they will see as a fetter on their ability to recover possession through s21, which many use in every case because it is easier, and will fear spurious claims by tenants to stymie eviction. Given that there is a defence that a local authority has yet to make an inspection after tenant complaint and that local authorities are likely to be unable to meet demand this could result in a massive block on the ability of landlords to use s21 at all. The original bill had an obligation on local authorities to carry out checks. This has been removed and so there is no clear picture on how promptly this will be done. Many private landlords will be deeply concerned by the potential uncertainty this will bring. I do wonder whether in practice this might be enough of a fetter on s21 to be seen as a breach of Article 1, Protocol 1 of the ECHR but that may be a stretch!
I am also amused by the removal of the requirement from s21(4)(a) for the notice to expire at the end of a period of the tenancy. Most landlords will be oblivious to this after Spencer v Taylor but my interest in this case is well known to be excessive! However, it remains the case that an s21 notice cannot give less notice than a common law notice to quit so this change only removes one common error area in the use of s21(4)(a).
A more structured s21 notice is probably welcome relief. Many people think that there is a standard form to s21 notices anyway so providing such a structure will probably make things better all round.
The issue of apportionment is interesting. However, I am not convinced this actually occurs as much as the government thinks. If landlords decline to apportion rent it is far more likely to happen on a break clause or in relation to a tenant’s notice which is not covered by this change. This is also a messy way of dealing with the issue. A better and more thorough solution would be to fix the Apportionment Act so that it applies to rent paid in advance and not just rent paid in arrears.
There will end up being a lot of confusion here in a provision which is already confusing. Some of the changes make sense, others less so. Many changes also apply only in England and not Wales and so the current process of creating Wales as a separate Housing jurisdiction will continue.