1. Adrian Newborough Fosters Solicitors William House, 19 Bank Plain, Norwich, Norfolk, NR2 4FS A LEGAL UPDATE ON THE DEREGULATION ACT 2015 OR PUT ANOTHER WAY: ANOTHER TALK FROM A LAWYER ABOUT SECTION 21 OF THE HOUSING ACT 1988 AND TENANCY DEPOSITS, BUT IT IS IMPORTANT, I PROMISE.

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4. Fosters Commercial Introduction Well another year, and another talk about Section 21 notices and tenancy deposits. Those seasoned visitors to this conference may wonder if I talk about anything else, but the problem is that every year something significant comes along. Depending on what happens on the 7th May 2105, it may be change again.

5. Fosters Commercial On 26 March 2015, the Deregulation Bill received Royal Assent. It is a catch all piece of legislation that covers a number of areas of law and was rushed through at the end of the final session of the last parliament. Deregulation Act 2015

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8. Background to the Relevant Changes Even though it was rushed through in the dying embers of the last parliament, the proposals now dealt with in the Act had been subject to debate over a two year period. Previous versions of proposed amendments to the HA 1988 had proved controversial. In particular, a provision that would bar a landlord from "retaliatory eviction", which can occur where a tenant complains about something (usually that repairs are required) and the landlord responds by ending the tenancy under Section 21. Many landlords complained that the original proposals would have made it very easy for a tenant to delay a landlord's ability to obtain possession over a let property once the fixed term of the tenancy came to an end, by making spurious claims for repairs.

9. Fosters Commercial Background to the Relevant Changes The new Act still requires the tenant to notify its landlord in writing of repairs that are required to the property and follow this up (if appropriate) by contacting the local housing authority (LHA). If the LHA serves certain types of enforcement notice on the landlord, then the Section 21 notice is invalidated. It may be that the changes move power too far back to landlords, as a tenant may find it difficult to comply with all the criteria for establishing protection before the landlord's Section 21 notice takes effect. The proposals also covered placing a limit on a landlord's ability to serve a Section 21 notice at the start of an AST, and to ensure that tenants are actually given two months' notice before the tenancy comes to an end. They also proposed a prescribed form for a notice served under Section 21. This new form is supposed to simplify the process for landlords and reduce scope for error. Other provisions remove the need for a landlord to specify the exact date on which the tenancy comes to an end, although some may say this will simply create uncertainty for tenants.

10. Fosters Commercial Background to the Relevant Changes It was also proposed to give the courts power to suspend an eviction of a tenant where the landlord has failed to comply with certain legal obligations. It was also proposed to introduce an obligation on landlords to provide information about the respective rights and responsibilities of both the landlord and the tenant under an AST, and to introduce a procedure that would give a tenant a statutory right to claim back rent paid in advance in respect of a period falling after a Section 21 notice brings the tenancy to an end. These provisions were to apply to England only and will not affect ASTs where the fixed term was granted before these provisions came into force.

11. Fosters Commercial ‘Retaliatory Eviction’ Sections 33 to 41 of the DA 2015 contain provisions that, in England: Restrict a landlord's ability to rely on a notice ending an Assured Shorthold Tenancy (AST) under Section 21 of the Housing Act 1988 (Section 21 notice). A landlord is so restricted if a tenant: 1.Has made a written complaint to its landlord regarding the condition of the premises or common parts before a Section 21 notice is given; and 2. The landlord has not responded, or its response is inadequate, or it then serves a Section 21 notice. 3. The tenant can follow this up (if appropriate) by contacting the local housing authority (LHA). The LHA can serve certain types of enforcement notice on the landlord. This will be an Improvement Notice. If the LHA does so, the Section 21 notice is invalidated.

12. Fosters Commercial These provisions do not apply where: (Sections 33 and 34, DA 2015.) (i) The tenant is in breach of its duty to use the premises in a tenant-like manner (or an express provision in the tenancy to the same effect); (ii) The premises are genuinely on the market for sale; (iii) The landlord is a private registered provider of social housing; (iv) The premises were charged before the grant of the tenancy and the mortgagee wishes to exercise its power of sale and requires vacant possession. ‘Retaliatory Eviction’

13. Fosters Commercial A New Prescribed Form of Section 21 Notice It will remove the need for a landlord to specify, in a Section 21 notice terminating a periodic Assured Shorthold Tenancy, the last day of a period of the tenancy as the date on which the tenancy comes to an end (section 35, DA 2015). It will limit a landlord's ability to serve a Section 21 notice at the start of an AST, so that tenants are actually given two months' notice before the tenancy comes to an end i.e. to serve it two months from the end of the tenancy (section 36, DA 2015). The Secretary of State to make regulations that prescribe the form of a Section 21 notice (section 37, DA 2015).

14. Fosters Commercial Restrictions on Serving a Section 21 Notice The Act will prevent the landlord from giving a Section 21 notice where it has failed to comply with certain statutory obligations. These obligations will be set by regulations and can relate to the condition of the premises and common parts, health and safety and energy performance (section 38, DA 2015). It will introduce an obligation on landlords to provide information about the respective rights and responsibilities of both the landlord and the tenant under an AST. The landlord will be prevented from giving a Section 21 notice when it is in breach of this requirement (section 39, DA 2015) Give a tenant a statutory right to claim back rent paid in advance, calculated on a daily basis, in respect of a period falling after a Section 21 notice brings the tenancy to an end (section 40, DA 2015).

15. Fosters Commercial The new rules in sections 33 to 40 will not apply to a fixed term AST in existence on the date that the relevant rule comes into force and that becomes a statutory periodic tenancy under section 5(2) of the Housing Act 1988 after that date. Section 37 of the DA 2015 will come into force on 1 July 2015. Sections 33 to 36, 40 and 41 of the DA 2015 will come into force on 1 October 2015. Sections 38 and 39 of the DA 2015 will come partly into force on 1 July 2015, enabling the power to make regulations to be exercised, and fully into force on 1 October 2015. Restrictions on Serving a Section 21 Notice

16. Fosters Commercial Tenancy Deposits Tenancy Deposit Schemes (TDSs) were created under the Housing Act 2004 (HA 2004) and became compulsory for all residential Assured Shorthold Tenancies (ASTs) created on or after 6 April 2007. The Localism Act 2011 (LA 2011) made changes to the tenancy deposit regime by extending the scope of the requirements for deposits to be held in TDSs. Property practitioners have found certain aspects of the HA 2004 challenging. Consequently, a number of cases have come before the courts, the most prominent being Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 and Charalambous v Ng [2014] EWCA Civ 1604.

17. Fosters Commercial Superstrike v Rodrigues The Court of Appeal has confirmed that a fixed term AST which continues as a statutory periodic AST under section 5 of the Housing Act 1988 (HA 1988), is a new tenancy. As a result, a deposit paid before 6 April 2007 and held by the landlord should be registered with a TDS when the statutory tenancy arises after that date. The court held that as it was a new tenancy the landlord must issue fresh prescribed information to the tenant, even where it had done so in the original fixed term. Charalambous v Ng The Court of Appeal held that a landlord was not required to pay a rent deposit in respect of an AST into an authorised scheme, where there was no authorised scheme at the time the deposit was received. However, the landlord could only make use of the procedure in section 21 of the HA 1988 to end the AST if the deposit was returned to the tenant, or possibly if it had been protected in an authorised scheme at the time the notice was served.

18. Fosters Commercial Prescribed Information - The Current Position A landlord must comply with the initial requirements of the TDS and give certain prescribed information. The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 (SI 2007/797) (the Prescribed Information Order 2007) specifies the prescribed information, which includes: (i) Generic information about the scheme, which the TDS scheme administrator is required to provide to the landlord. (ii) Specific information about the deposit and the tenancy under which it is paid.

19. Fosters Commercial The current "initial requirements" of an authorised scheme must be complied with by the landlord within 30 days from the date of receipt of the deposit (section 213(3), HA 2004 as amended by section 184 of the LA 2011)). The extended period only applies where the deposit has been received by the landlord on or after 6 April 2012 when section 184 came into force. The landlord must give the tenant the prescribed information within 30 days of receipt of the deposit (section 213(5) and (6), HA 2004). Prescribed Information - The Current Position

20. Fosters Commercial All Change The Deregulation Act 2015 The provisions came into force on the 26 March 2015.

21. Fosters Commercial Statutory Periodic Tenancies: Deposit Received Before 6 April 2007 All Change Section 215A will apply where all of the following apply:  Before 6 April 2007, a tenancy deposit has been received by a landlord in connection with a fixed term AST.  On or after 6 April 2007, a periodic AST is deemed to arise under section 5 of the HA 1988 on the coming to an end of the fixed term AST.  On the coming to an end of the fixed term AST, all or part of the deposit paid in connection with the fixed term AST is held in connection with the periodic AST.

22. Fosters Commercial  In relation to the deposit held in connection with the periodic AST, the landlord has not complied with the requirements of section 213(3), (5) and (6) of the HA 2004 (the Prescribed Information).  If, on the 26 March 2015, the periodic AST exists, and all or part of the deposit paid in connection with the fixed term AST continues to be held in connection with the periodic AST, section 213 applies in respect of the deposit that continues to be held in connection with the periodic AST, and any additional deposit held in connection with that tenancy, with the modifications set out in section 215A(3). Section 215A provides that the requirements regarding the provision of prescribed information (see Prescribed information) will be satisfied if they are complied with within 90 days of the 26 March 2015 Key point: it would give a landlord retrospective protection so long as they comply in time (I calculate that as the 23 June 2015 being 90 days from Royal Assent) All Change

23. Fosters Commercial Renewal ASTs: Deposit Received on or After 6 April 2007 A new Section 215B will be introduced into the HA 2004, which will take effect where all of the following apply:  On or after 6 April 2007, a tenancy deposit has been received by a landlord in connection with an AST ("the original tenancy") (section 215B (1)(a), HA 2008).  And; The initial requirements of an authorised scheme have been complied with by the landlord in relation to the deposit  And; The landlord has complied with the requirements of section 213(5) and (6)(a) (“the Prescribed information”) in relation to the deposit when it is held in connection with the original tenancy  And; A new AST comes into being on the coming to an end of the original tenancy or a tenancy that replaces the original tenancy (directly or indirectly).

24. Fosters Commercial A tenancy replaces an earlier tenancy if the landlord and tenant immediately before the coming to an end of the earlier tenancy are the same as the landlord and tenant at the start of the new tenancy and the premises let under both tenancies are the same or substantially the same (section 215B(4), HA 2004). Provided that when the new tenancy comes into being, the deposit continues to be held in connection with the new tenancy, in accordance with the same authorised scheme as when the requirements of section 213(5) and (6)(a) were last complied with by the landlord in relation to the deposit. Renewal ASTs: Deposit Received on or After 6 April 2007

25. Fosters Commercial If all the above apply then Section 215B(2) provides that the requirements of section 213(3), (5) and (6) are treated as if they had been complied with by the landlord in relation to the deposit with regard to the new tenancy. So in short provided a landlord served protected the deposit and served the prescribed information in relation to the fixed tenancy, they don’t have to do it for the new tenancy. NB This will NOT protect landlord’s who failed to protect the deposit and prescribed information. They will still be liable for penalties under the current regime i.e. a bar on serving a Section 21 notice (unless they return the deposit or reach agreement about the deposit with the tenant) and a potential penalty of between one and three times the deposit. Renewal ASTs: Deposit Received on or After 6 April 2007