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Tenancy Deposits: can I serve a Section 21 notice? - A quick guide and flowchart

Section 21 of the Housing Act 1988 provides a no-fault procedure for the recovery of possession of a property let on an assured shorthold tenancy.

At first glance, it appears a very simple procedure. The landlord serves a notice, waits for it to expire and – if the tenant fails to vacate – issues a possession claim.

Unfortunately for landlords, the Housing Act 2004, the Localism Act 2011 and the Deregulation Act 2015 have imposed various preconditions and prohibitions on the service of a section 21 notice.

One area that causes particular difficulty for many landlords is that of tenancy deposits.

If a landlord were to grant an assured shorthold tenancy today and take a tenancy deposit consisting of money, its obligations would be relatively simple. It would have to protect the deposit in a tenancy deposit scheme within 30 days of receipt and it would have to serve the statutorily prescribed information relating to the deposit scheme on the tenant before it served a section 21 notice. If the landlord failed to protect the deposit in time, the landlord may be forced to return the deposit to the tenant before serving a section 21 notice. This can be particularly galling for a landlord whose tenant is failing to pay rent and falling into significant arrears in the meantime.

The landlord’s obligations regarding the deposit and its entitlement to serve a s. 21 notice can be harder to ascertain where a tenancy has existed for a number of years and the deposit was received at or before the start of the tenancy. This can often be the case where a landlord has allowed a tenant to remain in occupation for a long time under a statutory periodic tenancy that arose on the coming to an end of a fixed term AST. In such cases, tenants may think that they have a cast-iron defence to a possession claim relying on s. 21 if the landlord did not protect the deposit within 30 days of receipt. But the law is not so simple.

The combined effect of the 2004, 2011 and 2015 Acts and their various transitional provisions is that in some cases a landlord may protect a deposit years after receipt and still be entitled to serve a s. 21 notice. Whether the landlord is entitled to do so depends on when the deposit was received, when the current tenancy commenced and when the deposit was protected.

The attached flow-chart is intended to summarise the effect of the various pieces of legislation and provide a quick-reference guide to a landlord’s entitlement to serve a s. 21 notice. Please note, however, that the guide only addresses tenancy deposit issues. There are many other preconditions that a landlord needs to satisfy in order to serve a s. 21 notice. Compliance with these other requirements is outside the scope of this article and the attached flow-chart.

Winston Jacob / 8th Feb 2016


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