Section 21 Notices – a new issue for Property Guardian companies!
Whilst I have managed to continue to successfully secure possession orders against a handful of property guardians for various companies in the last few weeks, I am seeing more and more property guardians defending those proceedings, and in some instances, counterclaiming too.
So, what happens then?
We would quickly assess the factual matrix of the property guardian’s occupation to advise you on the merits of your possession claim based on the expiry of a valid notice to determine. Ideally, we continue to vigorously pursue the original trespass claim for possession.
In some cases, where we have concerns about the strength of a guardian’s argument in asserting it has exclusive possession, we may reluctantly advise you to serve a notice/s pursuant to section 8 and/or section 21 of the Housing Act 1988 on a without prejudice basis to your primary contention that the guardian is a licensee.
The primary purpose of serving a section 8 or 21 notice on a without prejudice basis, would be to make no admissions in respect of whether there is a tenancy in place. You are only doing this for commercial reasons (typically because you must hand back the building on time).
A potential issue with a section 21 notice?
Serving a section 8 or 21 notice should be a last resort for you, especially as a new issue has arisen after a recent court decision.
Serving a section 21 notice is always risky, as you may inadvertently be seen to be admitting you have created an AST. Your business model does not mirror the strict requirements of the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (the “Requirements”). As you are not a landlord, you do not register the deposit, or provide the EPC or gas safety certificate (amongst other Requirements). Furthermore, a savvy property guardian may argue that in doing so, you are acting like a landlord, and therefore are a landlord.
In a recent case of interest – Caridon Property Ltd v Monty Shooltz – District Judge Bloom refused to make an order for possession because Caridon had not provided a gas safety certificate to the tenant at the start of the tenancy. Caridon had only served a gas safety certificate shortly before serving its section 21 notice.
Caridon sought to challenge that first decision and the appeal was heard by the circuit judge and housing lawyer, HHJ Jan Luba QC. He had to consider whether: i) there are any time limits for compliance with the gas safety certificate requirements and ii) a purposive reading of the Requirements should be applied to avoid Caridon being stopped from serving a section 21 notice?
HHJ Jan Luba agreed that the gas safety regulations had to be complied with at the start of a tenancy and dismissed the appeal.
In effect, this decision means that where a landlord fails to serve a gas safety certificate at the start of a tenancy, it cannot serve a section 21 notice, at least during the period of that tenancy. Although you do not have all the same obligations as a landlord, this case would make it very difficult for you to serve a section 21 notice, even on a without prejudice basis.
This is a county court appeal decision and is therefore not binding. However, given HHJ Luba’s housing experience, it is likely to send a highly persuasive message to housing practitioners and landlords nationwide. I expect this decision will be taken to the Court of Appeal and will keep you updated.
For any further advice on what this means for the future of the property guardianships business model, please do contact me directly.
This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. This update relates to the prevailing circumstances at the date of its original publication and may not have been updated to reflect subsequent developments. If you have general queries about our updates, please email: firstname.lastname@example.org