“Retaliatory evictions”

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Under the new provisions of the Deregulation Bill, a section 21 notice served on a tenant will be invalid where all of the following criteria are all met:

  • the tenant has complained of the state of repair of the property, and the landlord (or receivers acting
  • by the landlord) fails to provide an adequate response to the tenant within 14 days of receipt of the tenant’s complaint
  • the tenant subsequently complains of substantially the same issue(s) to the local authority
    the landlord’s response to the tenant making the complaint either to him or to the local authority was to serve a section 21 notice
  • as a result of the tenant’s complaint the local authority serves a ‘relevant notice’ (either an Improvement Notice or an Emergency Remedial Notice) in connection with the property.

In addition, a section 21 notice cannot be validly served for six months after the local authority serves one of the relevant notices in relation to the property (whether in response to a complaint by a tenant or otherwise) even if the landlord (or receivers) has subsequently taken action to remedy the breaches complained of.

However, at least until 2018, the new provisions will not apply to any tenancies entered into before the legislation comes into force and thus existing tenancies will not be subject to these additional stipulations. As such, any tenancy agreements inherited by receivers on their appointment which were already in place at the time the Deregulation Bill comes into force will not be subject to these requirements.

In addition, the new rules contain two important exceptions which will allow receivers to serve a valid section 21 notice where either (1) it can be shown that the poor condition of the property was caused by the actions of the tenants; or (2) it can be demonstrated that the property is genuinely on the market for sale.

The latter of these exceptions will assist receivers significantly if they are appointed over a property with the intention to sell the asset immediately. If receivers are able to evidence that they are preparing a property for sale at auction or through an estate agent or auction house, they may be able to rely on the exception in order to serve a valid section 21 notice notwithstanding that the tenant has complained about the condition of the property. Case law or future commentary is likely to dictate what stage of marketing a landlord or receiver must be at for the exception to be applicable.

In order to be able to show the court that the requirements of the exceptions have been met, and to retain the ability to rely on the section 21 notice to obtain vacant possession, the following steps may be advisable upon appointment:

  • request from the borrower in writing any notices or other documentation relating to the condition of the property
  • evidence as soon as possible the intention to sell the property
  • if the local authority has been known to have inspected the property recently due to its poor condition, liaise with the local authority to minimise the risk that an enforcement notice will be served in relation to the property
  • arrange an inspection of the property to ascertain current state of repair
  • ensure any complaints of disrepair are properly dealt with and document the same in writing.

It should be noted that the introduction of these provisions could lead to increased awareness amongst tenants of their rights, and receivers and their managing agents will need to be careful to ensure that they provide a response quickly if tenants complain about the state of a property. A failure to take the necessary precautions could lead to costly delay, and potentially significant costs in complying with an enforcement notice. However, whilst these provisions have not yet been tested in the courts, it is hoped that in taking relevant precautions and fully documenting their actions, receivers will be able to rely on the exceptions in the legislation and retain the ability to rely on a section 21 notice to obtain vacant possession of the property.