Landlords looking to terminate an Assured Shorthold Tenancy (AST) by serving a notice under Section 21 of the Housing Act 1988, following a chain of ASTs predating the coming into force of Tenant Fees Act 2019, are offered important guidance by the Court of Appeal in the judgment of Martyna Switaj v Adrian McClenaghan [2024].
This decision will be of interest to residential landlords involved in occupations by a chain of ASTs or statutory periodic tenancies, the earliest of which began before 1 June 2019, and for which, now prohibited check-in, check-out and administration fees were historically requested.
The Tenant Fees Act 2019 (TFA 2019) came into force on 1 June 2019. It does not apply retrospectively.
In the present case, the landlord sought to terminate an AST pursuant to Section 21 of the Housing Act 1988 (a so called 'no fault' eviction). The tenant argued that the notice was invalid because the landlord had failed to comply with the TFA 2019. The tenant was unsuccessful at first instance and on appeal.
The tenant occupied a residential property pursuant to an AST which had been entered into on 9 April 2021, after the coming into force of TFA 2019 (the New AST).
Prior to the coming into force of the TFA 2019, the tenant had occupied the same property pursuant to an AST which had been entered into on 12 April 2018 (the Original AST). Upon entering into the Original AST, the tenant had paid to the landlord: a deposit, an administration fee, a check-out fee and two instalments of rent.
As the tenant had continued in occupation after the Original AST, there had been no check-out. The new AST had been modernised to take account of the TFA 2019 which prohibits landlords from requiring the payment of a check-out fee.
Counsel for the tenant submitted that as the landlord had required a check-out fee in 2018 but had not returned it to the tenant prior to the tenant entering into the New AST, this amounted to a requirement to pay the check-out fee upon entering into the New AST. This would breach the TFA 2019, the consequence of which would be to invalidate the Section 21 notice (Section 17(3)).
Under the TFA 2019 (amongst other provisions), a landlord must not require a relevant person (a tenant) to make a payment which is prohibited by the TFA 2019 in consideration of the grant, renewal, continuance, variation, assignment, novation or termination of an AST (Section 1(6)(a)).
The Court of Appeal considered the use of "require" and "in consideration of" in the TFA 2019. It determined that the landlord's silence on the check-out fee in 2021 when the tenant was entering into the New AST (in the absence of the tenant expressly requesting a refund of it), was insufficient to amount to a requirement by the landlord, or an act in consideration of the tenant entering into the New AST.
The tenant was free to pursue the landlord for a refund of the check-out fee under the terms of the Original AST, as on the facts there had been no check-out, but this had no bearing on the validity of the Section 21 Notice which brought the New AST and the tenant's occupation under it to an end.
Landlords should – check pre-TFA 2019 payment demands which are now prohibited before serving a Section 21 Notice to evict a tenant. It may be necessary to refund administration, check-in and check-out fees and/or place deposits in a deposit protection scheme before a Section 21 Notice can be validly served.
