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Changes to Assured Shorthold Tenancies - landlords beware!

Landlords of Residential Property need to be aware that changes to Assured Shorthold Tenancies (ASTs) have been brought into force by the Deregulation Act 2015 which was passed just before dissolution of Parliament on 26 March 2015.  There has not been much press coverage on the changes which could be far reaching for Landlords who need to be aware of what the changes are.

What is referred to in A below is in force now but what is referred to in B, C and D below will only commence when the Secretary of State makes the relevant Order bringing these sections into force.  It is as well however for Landlords to be aware of what is the position and make sure that they are compliant fully with relevant legislation before they grant tenancies or they could become unstuck and find themselves with a property for which they cannot get vacant possession. Furthermore as referred to in C below they may need to change their standard tenancy documents so as not to include within it any notice under Section 21 of the Housing Act 1988 as such notice will become invalid when this part of the Act comes into force.  

In summary: 

A.    Rental Deposits - Section 30 - 32 

  1. If a Landlord took a deposit in respect of a fixed term AST before 6 April 2007 which then became periodic after 6 April 2007 then the Landlord needs to protect the deposit and provide the relevant prescribed information within 90 days of 26 March 2015.
  2. If a Landlord took a deposit in respect of an AST that became periodic before 6 April 2007 that the Landlord should protect that deposit but if it fails to do so there shall be no financial penalty in not doing so.  However, failure on the Landlord's part to so protect will mean that it will not be able to rely on the procedure under Section 21 of the Housing Act enabling the Landlord to get possession at the end of the term.

Thus in reality a Landlord who holds any monies by way of deposit be it before or after 6 April 2007 who does not place the same in an authorised scheme will find that it will have severe problems in getting possession and in the situation where the period tenancy arose after 6 April 2007 will suffer financial penalties. 

B.    Compliance with prescribed legal requirements - Sections 38 and 39 

The background to this section is that Landlords often rely on determining ASTs by service of notice on the tenant requiring possession under Section 21 of the Housing Act 1988) (Section 21 Notice)  such notice requires possession two months  thereafter but not expiring before the end of the contractual tenancy .The tenant generally has no ground to object. A Section 21 Notice will in future not be able to be given  (when these sections come into force) where the Landlord has not complied with  relevant legislation ( in relation to  the health and safety of occupiers, the condition of the dwelling/house or energy performance certificate requirements) or providing the relevant prescribed information as to the deposit 

C.    Time Limits for Section 21 Notices - Section 36 

Landlords when granting Assured Shorthold Tenancies were always of the view that given they are Assured Shorthold Tenancies they can be determined at any time (without reason) on giving a Section 21 Notice Landlords were in the habit of giving the notice before the actual tenancy was entered into and by so doing preventing any periodic tenancy from arising at the end of the term.  This procedure will effectively be barred as Section 36 makes clear that no Section 21 Notice can be given within four months beginning with the day on which the original tenancy began.  

D.    Repayment of Rent at the end of a tenancy - Section 40 

Where a tenant has paid rent in advance and the tenancy is terminated early by the service of a Section 21 Notice the tenant is entitled to be repaid that part of the rent that relates to the period for which the tenant is no longer in occupation.