EPCs and Section 21 Notices

28th June 2021 Commercial Litigation

The Court of Appeal has given an important judgement relating to the requirement to serve an EPC before serving an s21 notice. To be fair it is really more about which tenancies the Deregulation Act 2015 applies to but EPCs are involved!

The Deregulation Act made substantial changes to the prerequisites that landlords must comply with before serving a notice under section 21 of the Housing Act 1988 for an Assured Shorthold Tenancy (AST). These were introduced by amending the Housing Act 1988 to insert the new sections 21A and 21B. Section 21B ultimately gave rise to the How to Rent guide. S21A however empowered the Secretary of State to make regulations about property standards, safety and energy efficiency. These regulations were made as the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 (the “2015 Regulations”). It is these regulations that require landlords to have served their tenants with a landlords gas safety certificate and an EPC before they can serve an s21 notice.

However, the 2015 Regulations are subject to an important caveat. They specifically state that they apply to ASTs “granted on or after 1st October 2015”. This suggests that there have been no regulations made which apply to tenancies granted before 1 October 2015.

This was the facts in this case. The landlord granted a tenancy on 19 March 2008. This tenancy became a statutory periodic tenancy in March 2009 and stayed periodic thereafter. A s21 was served in December 2018 and possession proceedings were commenced February 2019.

The tenants had argued and had maintained before the Court of Appeal that they had not been served with an EPC prior to the service of the s21. The landlord argued, unsurprisingly, that there was no such obligation because the regulations plainly stated that they did not apply to tenancies that commenced before October 2015 as this one had. The tenants then argued that the regulations should not be read in this way and the pre-2015 exclusion should not be read as applying to the EPC requirement. The reason was that the Deregulation Act states that s21A applies to all ASTs in existence on or after October 2018 as this tenancy was. Further, the tenant argued that the regulations should be read this way because if the Secretary of State had made a regulation which limited the scope of the other regulations to tenancies that were granted after October 2015 it would have been ultra vires his powers. In other words the minister would have acted unlawfully. The Court of Appeal rejected both arguments. First, stating that s21A applied to all tenancies in existence after October 2018 simply meant that the Secretary of State could make regulations applying to those tenancies not that he had to. Or to put it another way, the Secretary of State could not make regulations that applied to tenancies that were in existence before October 2018 unless they had been granted on or after October 2015. There was no obligation to make such regulations. Second, the Secretary of State was perfectly entitled to make regulations which were limited in scope. There was no requirement on him in s21A to make regulations which covered every AST regardless of when it commenced.

This case does clarify one area of dispute around the regulations. It does not really have a lot to do with EPCs. However, it does make very clear indeed that the 2015 regulations which require a landlord’s GSC and an EPC to be given before an AST cannot apply to any tenancy which was granted before October 2015 unless it has been renewed after that date. So tenancies which have become periodic some time ago will not be subject to these requirements. There have been arguments made already which are similar to those made by the tenants that the requirements should still apply to older tenancies.

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David Smith is a Partner located in Londonin our Commercial Litigation department

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