In April 2012 the Localism Act 2011 brought in various changes which introduced strict requirements for landlords wishing to seek possession of residential property at the end of the term let under an Assured Shorthold Tenancy (AST). In addition, further changes will come into force on 1 October 2015 which provide further hurdles for landlords in securing possession of property at the end of the term.
Deposits – an introduction
Since April 2007:
Deposits – the first set of changes
The changes brought in have meant that since April 2012:
It is crucial for landlords who manage buy to let portfolios or developers investing in residential property let on ASTs that they ensure deposits are or have been protected within the correct time frame. If they have not been, the deposit will have to be returned to the tenant in full before a section 21 notice can be served.
Changes will also come into force on 1 October 2015 which mean further restrictions for landlords as to when they can serve section 21 notices:
These changes will only apply to tenancies granted after 1 October 2015 and they will not apply to tenants who “hold over” after 1 October 2015.
These changes will potentially have a huge impact on landlords and could cause real difficulties for landlords who want possession of residential property subject to ASTs. It is not clear, for example, what steps a landlord needs to take to address a tenant’s complaint about the condition of the premises adequately. In addition, the common practice of many landlord’s agents of serving a section 21 notice as soon as the AST is granted and the deposit protected will now be unlawful.
In addition to these changes, a new prescribed form of section 21 notice will be introduced on 1 October 2015. As with the other changes, this does not have to be used in relation to pre-existing tenancies but it can be used immediately, if a landlord so chooses.
Landlords who own portfolios which include residential property let on ASTs would be well advised to start implementing these reforms now so they become part of their standard practice by the time the new statutory provisions are in force. Developers need to make detailed enquiries when purchasing residential property to ensure there are no statutory bars to their obtaining possession of any parts of their development let on an AST.