This article is essential reading for all landlords of assured shorthold tenants.
The recent County Court decision in Caridon Property Ltd v Monty Shooltz is of crucial importance to all landlords of assured shorthold tenants. The decision in the case was that a landlord who had failed to issue a gas safety certificate to an assured shorthold tenant prior to moving in could never rely on a Section 21 Notice as a means of ending the tenancy and recovering possession.
Such is the potential importance of this decision for the residential property sector, in this article we unpack the decision in more detail.
The relevant law
Section 21A of the Housing Act 1988 (as amended by the Deregulation Act 2015) provides that for tenancies granted after 1st October 2015, a Section 21 Notice cannot be validly served on the tenant if the landlord is in breach of a "prescribed requirement". One of these prescribed requirements is that the landlord must have complied with any statutory obligations in respect of 'the health and safety of occupiers of dwelling-houses'.
These include the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (the "AST Regulations"). These Regulations list the need for a landlord to provide a tenant with a gas safety certificate in compliance with the Gas Safety (Installation and Use) Regulations 1998 (the "Gas Safety Regulations").
Regulation 36(5) of the Gas Safety Regulations states that it is a statutory requirement for every landlord to ensure that:
(a) a copy of the record made pursuant to the requirements of paragraph (3)(c) above is given to each existing tenant of premises to which the record relates within 28 days of the date of the check; and
(b) 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 save that, in respect of a tenant whose right to occupy those premises is for a period not exceeding 28 days, a copy of the record may instead be prominently displayed within those premises.
In the Shooltz case, the court had to decide whether a landlord could validly serve a Section 21 notice if Gas Safety Regulation 36(5)(b) hadn't been complied with at the start of the tenancy.
The Shooltz case
This case was an appeal to a Circuit Judge of a decision made by District Judge Bloom at Central London County Court. Mr Shooltz had an assured shorthold tenancy and had been served with a Section 21 notice by his landlord. The landlord had issued possession proceedings on expiry of the Section 21 notice. Deciding the possession claim, DJ Bloom held that because a gas safety certificate was only served on Mr Shooltz for the first time some 11 months after the tenancy had begun, this meant that a prescribed requirement of the AST Regs had not been compiled with and so the landlord's Section 21 notice was therefore invalid.
The decision was appealed and the appeal was heard to His Honour Judge Jan Luba QC, who before becoming a judge was one of the country's pre-eminent housing barristers. Upholding the decision and finding in favour of the tenant again, HHJ Luba decided:-
- Section 36(6)(b) of the Gas Safety Regulations must be compiled with at the start of the tenancy and this was a 'once and for all' chance for the landlord to get it right.
- Any other interpretation of the AST Regulations could potentially allow landlords to let dangerous and unchecked premises which had not compiled with regulations that are in place to protect tenants.
The judgment indicates the desire of the courts to apply a strict interpretation of the AST and Gas Safety Regulations, which is not surprising given that their purpose is to ensure that tenants should be entitled to move into and live in safe premises. Whilst Parliament may not have intended to impose such a draconian requirement on landlords, in the opinion of HHJ Luba the wording of the Regulations is clear and incontrovertible. If a landlord fails to get it right when the tenancy is granted, HHJ Luba's view is that the wording of the legislation means that the ship has sailed and the landlord has lost for all time the ability to end the tenancy through the 'no fault' Section 21 route. This would mean the landlord would need to rely on the grounds in Schedule 2 of the Housing Act 1988, many of which are mandatory and give the landlord no guarantee of recovering possession.
This might be a matter which the Government will look to address in the future by amending the Regulations. Alternatively, we may get a decision of the High Court (which would be binding authority whereas a County Court decision isn’t binding) that interprets the legislation differently. Until then, however, the Shooltz decision gives us the best indication of how the courts will approach this issue.
It's also worth noting that although Shooltz is only a County Court decision, the judgment will carry much weight amongst County Court judges as it is a decision of one of the country's leading housing lawyers. HHJ Luba is also one of the authors of "Defending Possession Proceedings", which is the textbook that most District Judges have on their benches to consult when deciding housing cases. As a result, our recommendation is that landlords should proceed on the basis that Shooltz is an accurate application of the relevant law, and we expect it to be relied on by tenants' solicitors wherever possible.
This means that with immediate effect, landlords should take the following actions:
1 Ensure that in all cases, tenants are provided with a gas safety certificate in advance of the start of the tenancy and in before the tenant moves in. If the tenancy will be a joint one, to be on the safe side the certificate should be issued to all prospective tenants.
2 Keep a detailed note of the date and time of issue of the certificate on the tenancy file. Ideally, the tenant should sign an acknowledgement to confirm the time and date of receipt. This could then be used as evidence in any subsequent possession action.
3 Review and update all staff, processes and systems to highlight the importance of the gas safety certificate being issued at tenancy commencement to reduce the chances of this important step being overlooked before the keys are passed to the tenant.
4 In a case where a gas safety certificate was not served at the start of the current tenancy and a replacement tenancy is being contemplated, ensure the latest certificate is served before the replacement tenancy begins.