Enforcing a Section 21 Notice

As property investors we have had to undergo significant change to our business model over the last ten years to adapt to the raft of changing legislation. We have seen the introduction of the tenancy deposit schemes, energy performance certificates, right to rent, as well as new measures to deal with identity fraud and money laundering.

Those who suggest that property investment provides a passive income continue to make me smile!

This month I want to address a couple of issues, one which signifies a change in legislation, namely the Minimum Energy Efficiency Standards which come into effect in April 2018 and also one which signifies a change perhaps in procedure regarding gas safety certificates.

You will no doubt have read my previous article about the Minimum Energy Efficiency Standards however I have received a number of calls and emails from readers who are concerned that their property will not reach a Band E score and may still not, even if some improvement measures are implemented.

To address these issues we must look at a very poorly publicised exemption system from the Department for Business, Energy & Industrial Strategy (BEIS) which allows landlords the ability to register to exempt their properties if they fall in a F or G category.

The critical point to note is that the exemption must be obtained BEFORE the property is rented and so this scheme will not work as a get out clause for a landlord who moves a tenant in without undertaking an EPC.

The exemption application itself can be submitted online and presently there is no fee payable to submit it.

The principal grounds for exemption can be considered as follows:

1) The works required to bring the property to Band F or G are prohibitively expensive and funding is not available.

2) In the opinion of a relevant expert, the property cannot be improved because the recommended wall insulation would have a negative impact on the property.

3) The relevant energy efficiency measure was required and sought however consent was refused or granted subject to a condition that the landlord could not reasonably comply with.

4)That the proposed works would devalue the property by a figure in excess of 5%

5) An initial six month exemption is possible if you have just acquired the property.

In respect of the exemption applications that I am currently dealing with on behalf of Clients, all are utilising the first rule, known as regulation 25,  that funding is not available to undertake the improvement works. These applications may be very timely as I understand that the Government is currently consulting with a view to withdraw this exemption and replace it with a capped cost.

As part of the application submission you will need to produce the current EPC together with the ancillary evidence relating to one of the five exemption categories noted above and any expert reports.

Do ensure that any exemptions are applied for as soon as possible as falling foul of the regulations could mean not only a fine of £5,000 but also the inability of being able to use the Section 21 route to regain possession of your property.

And on the subject of Section 21 Notices, a recent case in one of the London courts, has further highlighted the need to provide the gas safety certificate to the tenant at the outset of the tenancy in order to be able to successfully obtain possession using a Section 21 Notice.

This requirement was established a couple of years ago by the Deregulation Act however I have seen very few Courts request sight of the gas safety certificate  let alone refuse to grant possession without it. The rules, which currently only apply in England, state however that “a copy of the last record made in respect of each appliance or flue is given to any new tenant of premises to which the record relates before that tenant occupies those premises”

If your tenancy predates  1 October 2015 then you will skirt these requirements however that will cease to be the case from 1 October 2018.

This apparent change in the enforcement of the legislation has been compared to the Superstrike case which concerned deposits. Following that decision landlords had the option of returning deposits to their tenants. In respect of this situation it appears there is little the landlord could do other than hope the tenant leaves of their own free will.

May I therefore suggest that readers ensure that their tenant “move in” pack is comprehensive, up to date and that you obtain proof of service of its contents prior to the commencement of any tenancy.

As always, I am happy to assist readers and can be contacted on 01843 583000 or [email protected]