Five Most Common Mistakes That Prevent Landlords Serving Valid Section 21 Notices And How To Avoid Or Remedy Them
In order to regain possession of a property rented out under an assured shorthold tenancy (‘AST’) a landlord must follow strict legal procedure to gain a possession order from the court. This can be done under Section 8 or Section 21 of the Housing Act 1988. This article is concerned with Section 21.
The first step in gaining possession of the property will often be for the landlord to serve Section 21 Notice on the tenants – a no fault notice that gives that tenant’s two months’ notice to leave the property. However, there are regulations that prevent a landlord serving Section 21 Notice if certain legal requirements have not been complied with prior to service of the notice.
Before we serve Section 21 Notice on behalf of a landlord, we review all the relevant tenancy documents to check that the notice can be validly served. Here are some of the more common issues we encounter.
1. The Deposit hasn’t been properly protected
PROBLEM: Section 215(1) of the Housing Act 2004 states that If a tenancy deposit has been paid in connection with a shorthold tenancy, no Section 21 Notice may be given in relation to the tenancy at a time when—
- the deposit is not being held in accordance with an authorised scheme, or
- the initial requirements of such a scheme (see Section 213(3) have not been complied with in relation to the deposit.
The deposit must be protected and the prescribed information must be served within 30 days of the deposit being taken.
While it is rare nowadays for the deposit to be completely unprotected, it is not uncommon for the deposit to be protected out of time. In these circumstances, the initial requirements have not been complied with. A landlord will not be able to recover possession by serving a Section 21 Notice until they have complied with the rules. The unprotected deposit will make the notice invalid and proceedings based on it will fail.
The only way of remedying this problem is to return the deposit to the tenant. This can be painful to contemplate, particularly if the tenant is in rent arrears or the landlord is concerned that the tenant may leave damage to the property. In addition, if the deposit is held within a scheme, the landlord must make a request to the specific deposit protection scheme for the deposit be returned. The scheme’s procedure must be used: the landlord cannot use their own funds to repay an amount equivalent to the deposit. The difficulty in this scenario is that the tenant can evade the return of the deposit via the scheme and until the scheme confirms that the deposit has been repaid to the tenant, the landlord will not be able to serve a valid Section 21 Notice.
PREVENTION: Ensure the deposit is protected and the Prescribed Information is served on the tenants within the 30 day window. Document this clearly.
CURE: Return the deposit to the tenant before serving Section 21 Notice.
Alternatively you can use Section 8 Notice and procedure if the tenant is in breach of the terms of the AST. However, this carries with it the risk of a counterclaim by the tenant for return of the deposit and a penalty sum of between one and three times the deposit if the initial deposit protection requirements have not been complied with.
2. The Prescribed Information hasn’t been properly served or is incorrect
PROBLEM: There are three different authorised schemes all of which have slightly different prescribed information (‘PI’) requirements. This is less than ideal as it makes it difficult for landlords to be sure they are complying. For example, the DPS requires its terms of business to be served as part of the PI whereas My Deposits requires an Information for Tenants leaflet to be served.
Failing to serve all of the necessary documents is a common problem, as is not using the correct form of the PI. Other common issues include failing to match the details of the landlord or tenant to the details in the AST; failing to complete the amount of the deposit or failing to include the relevant clauses in the AST that relate to when a deposit may be retained by the landlord. All of these things will render the PI incorrect and make service of a valid Section 21 Notice impossible.
PREVENTION: Check and check again.
- Are the landlord’s details the same as in the AST?
- Are the tenant’s details the same as in the AST?
- Has all the required information been included?
- Have any additional documents required been included?
- Has the tenant has the opportunity to sign to acknowledge the details are correct?
CURE: if the PI hasn’t been served or has been served incorrectly the landlord is able to simply resolve this problem by serving the correct prescribed information before the Section 21 Notice is served.
3. The name of the landlord is wrong on the AST
PROBLEM: This happens surprisingly often given that you would expect this is one piece of information a landlord would be sure of. However, we often encounter ASTs where:
- the landlord is a company but the AST is in the name of an individual director of the company; or
- the landlord has someone acting on their behalf and the landlord is given as the person acting rather than the owner of the property; or
- the landlord on the original AST is no longer the current landlord.
A minor spelling error where the landlord is obviously identifiable from the AST shouldn’t cause a problem but where the landlord is an entirely separate entity or person, valid notice cannot be served.
PREVENTION: Agents – make sure you check the details of property ownership carefully with the owner of the property before drawing up an AST. Landlords should make sure they have communicated the correct details to the agent if they are not drawing up their own AST.
CURE: Serve Section 48 Notice on the tenants with the correct name and address for service of the landlord before serving Section 21 Notice. Serve new PI with the landlord’s correct details before serving Section 21 Notice. If the deposit has been protected using the incorrect landlord’s details you will need to arrange the deposit to be returned before serving Section 21 Notice (see point 1 above).
4. Selective or additional licence hasn’t been obtained
PROBLEM: In several areas the local authority has introduced selective or additional licensing for private rented accommodation that sits alongside the national HMO licensing scheme. If the property requires either a HMO, selective or additional licence, this must be applied for before a valid Section 21 Notice can be served.
PREVENTION: Check the licensing provisions of the local authority and make sure you know what licensing requirements relate to the property. The local authorities do change the requirements from time to time.
CURE: If the property does not have a licence and it requires one, the landlord should apply for the licence before serving Section 21 Notice. The local authority should agree to provide confirmation of the application. It is not necessary to wait for the licence to be issued before serving notice.
5. How to Rent, Energy Performance Certificate, or Gas Safety Certificate hasn’t been served
PROBLEM: For tenancies entered into since 1 October 2015, it is a requirement that the landlord provide the tenant with the How to Rent Booklet (https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/942503/6.6642_MHCLG_How_to_Rent_v5.pdf), a current Gas Safety Certificate and a current Energy Performance Certificate. If this hasn’t been done, the landlord is prevented from serving a valid Section 21 Notice. Increasingly the court requests proof that this had been complied with before granting a possession order.
PREVENTION: Ensure that the How to Rent checklist, the EPC and the GSC are provided to tenants at the start of a tenancy as a matter of course and that this is clearly documented. Ensure that there is reminder system in place whereby new certificates are provided on expiry of the GSC and the EPC.
CURE: If the documents haven’t been served or the landlord cannot clearly show they have been served simply serve the documents again before the section 21 notice is served
If you have any questions please do not hesitate to get in touch.