The case of Trecarrell House Ltd v Rouncefield offers this blog a rare opportunity to offer some good news to Landlords and Agents.
Some of you may recall our original blog on this particular case ( https://painsmith.co.uk/invalid-section-21-2/ ). We mentioned at the time that the case would be subject to an appeal. This proved to be the case and judgment has been handed out by the Court of Appeal.
To assist in the jogging of memories, the original case dealt with the service of an up to date Gas Safety Record (GSR) and the effect of any failure to do so, on the service of a Notice pursuant to Section 21 Housing Act 1988. In the original case HH Judge Carr relied upon the previous decision in Caridon Property Limited v Monty Shooltz to determine that a failure to provide a valid GSR before the tenant took occupation was an irredeemable fault that would mean that a valid Section 21 notice could not be served on the tenant to end an Assured Shorthold Tenancy.
This decision along with that of Caridon v Monty Shooltz, caused many Landlords and Agents to start panicking. Whilst this would obviously and rightly, affect Landlords an Agent who had been negligent in ensuring the safety of the property when the tenant moved in, the secondary affects would be, as raised by Lady Justice King in her Court of Appeal judgment:
‘40. If the proper interpretation of regulation 2(2) of the 2015 Regulations means that a landlord cannot put right his omission to comply with regulation 36(6)(b) then, notwithstanding that all proper gas safety checks may have been completed and the failure be the result only of an administrative oversight, the consequence of that error is that that landlord, can no longer rely on the “no fault/notice only” ground for possession under s21 Housing Act 1988, a procedure which goes hand in hand with the form of shorthold tenancy agreed and entered into between the tenant and landlord. Instead, the tenant’s assured shorthold tenancy becomes a fully assured tenancy with accompanying security of tenure.’
Essentially any procedural oversight in not sending the GSR until a couple of days after the tenant moved in or just not keeping the records on file to prove service originally, could result in not being able to comply with Paragraphs (6) and (7) of regulation 36 of The 1998 Gas Safety (Installation and Use) Regulations. This would in turn mean non-compliance with Regulation 2 of the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 which would result in an embargo on the service of a section 21 notice for the rest of the tenancy. Bad news all round for those of you with a less than pristine filing system or Landlords whose original agents may not be in business anymore.
The above all leads us to the Court of Appeal decision for which the judgment was released last Thursday which has now reversed that decision with a 2 to 1 split decision.
There were many convincing arguments used and justification provided in the judgment which I would recommend that anyone with a bit of spare time reads through. One of which drew parallels with other sanctions that affect the service of a section 21 notice, namely failure to adequately protect the deposit. If a deposit is not protected then a section 21 notice cannot be served. That is until the deposit is returned to the tenant. Whilst clearly a breach, there is a way to remedy the situation (save for financial penalties) and serve a valid notice.
The judgment looked at the requirements of Section 21A(1) and that it refers only to the time “when the landlord is in breach of a prescribed requirement” that there is an embargo on section 21 notices and notes that there is ‘no clear guidance as to what the landlord must do in order to cease to be in breach of the requirement in question.’
Ultimately, it was decided that the breach of failing to serve the valid GSR before the tenant moved in was something that could be remedied. As long as a valid GSR has been provided to the tenant before service of a section 21 notice, any previous breach of obligation of service will not affect the validity of the notice seeking possession.
It is worth noting that this does not give carte blanche for Landlords and Agents to wilfully neglect safety requirements. As Lord Justice Patten addresses:
‘It is important, I think, when considering the intended effect of regulations 36(6) and (7) as prescribed requirements to keep well in mind that s.21A HA 1988 is not the primary sanction for non-compliance. As with any other health and safety regulations, a breach of the 1998 Regulations is punishable as a criminal offence under s.33 of the Health and Safety at Work etc. Act 1974 and a landlord whose breach of the regulations results in the death of a tenant may also have a potential criminal liability for manslaughter. The imposition by s.21A of a bar to the service of a s.21 notice is therefore only collateral to these sanctions and, at best, a spur to compliance.’
Certainly welcome news to Landlords and Agents. Hopefully this will give one less thing to worry about when trying to serve a section 21 notice or start possession proceedings for the time being. However, as with any regulation that is as open to interpretation as the 2015 Regulations are, there will always be room for dissenting opinions and arguments of case by case interpretation/compliance requirements.