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Good news for landlords! No requirement to provide EPC for pre-2015 tenancies

Michael Grant discusses a recent decision by the Court of Appeal on whether a section 21 notice served by landlords on a tenant was invalid because no energy performance certificate ("EPC") had been served on the tenant prior to the service of the notice.

The Facts

In Minister v Hathaway [2021] EWCA Civ 936 a 12-month fixed term assured shorthold tenancy was granted in March 2008, and became a statutory periodic tenancy in March 2009 by virtue of s5(2) Housing Act 1988 (“1988 Act”).

On 6 December 2018, the landlords (Hathaway) served a s21 notice on the tenant (Minister) without having provided the tenant with an Energy Performance Certificate (EPC) prior to that date.

Proceedings for possession were commenced in February 2019, and the tenant defended the claim arguing that the landlord should have provided an EPC before serving the s21 notice.

The Law

The Deregulation Act 2015 (“2015 Act”) introduced s21A into the 1988 Act. That section makes it unlawful to serve a s21 notice in England when the landlord is in breach of legal requirements relating to the provision of Energy Performance Certificates.

DA 2015 s41(1) restricts the application of s21A to assured shorthold tenancies granted on or after 1 October 2015.

DA 2015 s41(2) further restricts the application of s21A in relation to statutory periodic tenancies that have arisen after 1 October 2015, but have done so on the coming to an end of a fixed-term assured shorthold tenancy granted before 1 October 2015.

DA 2015 s41(3), however, seeks to cast a wider net as to the future application of s21A, and is worth setting out in full:

(3)    At the end of the period of three years beginning with the coming into force of [s21A] [that is, 1 October 2018], that provision also applies to any assured shorthold tenancy of a dwelling-house in England –

(a)    which is in existence at that time, and

(b)    to which that provision does not otherwise apply by virtue of subsection (1) or (2).

The Assured Shorthold Tenancy Notices Prescribed Requirements (England) Regulations 2015 (“2015 Regs”) came into force at the same time as the DA 2015 on 1 October 2015. They set out the detail of what is required in respect of Energy Performance Certificates (and other requirements), but in Reg 1(4) they are expressly stated not to apply to tenancies granted before 1 October 2015, or to periodic tenancies arising automatically on or after 1 October 2015 by virtue of s5(2) of the 1988 Act.

The Appeal

The tenant argued that by virtue of DA 2015 s41(3), as from 1 October 2018 all tenancies (no matter their date of commencement) were caught by s21A and the prescribed requirements under the 2015 Regs.

The landlords argued that until new secondary legislation was introduced to cater for the catch-all imposition in s41(3), then, for tenancies that commenced prior to 1 October 2015, there is currently no “prescribed requirement” in force that could give rise to a breach for non-service of an EPC (because the 2015 Regs do not apply to such tenancies).

Arnold LJ agreed with the landlords’ reasoning. He stated:

“Section 21A(1) only bites on such a tenancy if and to the extent that the Secretary of State exercises the power conferred by section 21A(2) to prescribe requirements.”

He went to say that the Secretary of State is under no obligation to prescribe any requirements at all, and that a failure to have done so is within the ambit of powers enjoyed by the Secretary of State.

He also made his feelings as to the attempted imposition of s41(3) exceedingly clear – which feelings will no doubt be welcomed by the landlord community:

“Moreover, it would be understandable if the Secretary of State, when considering whether to exercise that power, decided not to do so on the ground that that would place an undue burden on landlords seeking to exercise their section 21 rights in respect of tenancies which were not subject to the requirements imposed by regulation 2 when granted.”

Discussion

Since the DA 2015 was passed, housing lawyers and property practitioners alike have been asking the question as to whether secondary legislation needed to be passed, in order for s41(3) to take effect. This question has finally been answered by the Court of Appeal.

All tenancies that commenced prior to 1 October 2015 are not subject to s21A of the HA 1988, unless and until new regulations are passed by the Secretary of State.

This will be a welcome decision indeed for landlords, and will likely send shockwaves across the Housing Law community. Importantly, the reach of its scope covers not only EPCs but also Gas Safety Certificates, which – as many of you reading this will know – has been a hot topic over the last few years.

Perhaps this decision, coupled with that seen last year in Trecarrell House Ltd v Rouncefield [2020] EWCA Civ 760, indicates an attempt by the courts to tip the scales of justice – back in the direction of equilibrium between tenants and landlords.

Michael Grant is a member of the Property and Housing teams at 42 Bedford Row and specialises in all aspects of residential and commercial property litigation.

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