THE HOUSING (WALES) ACT 2014
On 17 September 2014, the Housing (Wales) Act 2014 (“the 2014 Act) received Royal Assent. Part 1 of the 2014 Act, regulates the letting of certain kinds of tenancy and the management of those dwellings by a system of registration and licensing: s.1(1). It requires landlords, inter alia, to be licensed to carry out property management activities, such as collecting rent: s.1(2)(c) and s.7(2)(a).
Part 1 applies to ‘domestic tenancies’, which is defined as meaning: (a) an assured tenancy for the purposes of the Housing Act 1988 (which includes an assured shorthold tenancy); (b) a regulated tenancy for the purposes of the Rent Act 1977; or (c) a tenancy under which a dwelling is let as a separate dwelling and which is of a description specified in an order made by the Welsh Ministers under Part 1 of the Act: s.2 (1)(a)-(c). The Welsh Ministers have not specified any such tenancies.
By section 7(2)(f), 2014 Act, a landlord of a domestic tenancy in Wales (to which an exception does not apply) must not serve notice to terminate a tenancy unless he is licensed to do so under Part 1, 2014 Act. The landlord can, however, arrange for an authorised agent to serve the notice to terminate. For the purposes of serving notice to terminate a tenancy only, a qualified solicitor or a person acting on behalf of such a solicitor is an “authorised agent”. Section 7 also creates a criminal offence.
BACKGROUND TO THE APPEAL
Mr and Mrs Evans’ held an assured shorthold tenancy that began on or about 1 December 2015. They have lived at the property, however, since 2012. Mr Jarvis, their landlord, alleged rent arrears and served a notice under section 8, Housing Act 1988. The notice relied upon grounds 8, 10 and 11, schedule 2, Housing Act 1988. At the time, Mr Jarvis was not licensed.
A claim for possession of the property was subsequently issued. Mr and Mrs Evans filed and served a defence and counterclaim. At first instance, a possession order was granted on a summary basis (the issue of validity of the notice having not been raised).
Mr and Mrs Evans sought permission to appeal to a circuit judge on the basis that the section 8 notice was invalid. Her Honour Judge Garland-Thomas allowed the appeal on the bases that:
(a) it was accepted by Mr Jarvis that he was neither registered nor licensed under Part 1 of the 2014 Act at time of service of the section 8, Housing Act 1988; and,
(b) a section 8, Housing Act 1988 notice falls within section 7, 2014 Act and, therefore the landlord of a dwelling subject to a domestic tenancy must not or cannot serve notice to terminate a tenancy.
Mr Jarvis was granted permission to appeal from the Court of Appeal and, due to the importance of the case, the Court lifted the stay under Practice Direction 51Z so that the appeal could be heard.
ISSUES ON APPEAL
There were two questions on appeal both of which the Court of Appeal answered in the tenants’ favour.
- Does section 7(2)(f) of the 2014 Act (“serving notice to terminate a tenancy”) extend to the service of a notice under section 8 of the 1988 Act?
- If yes, is a notice served in breach of section 7 of the 2014 Act invalid?
Issue 1: Scope of section 7(2)(f)
The Court held, the words “notice to terminate a tenancy” are apt to refer to a section 8, Housing Act 1988 notice and it would be all but meaningless if, as contended by Mr Jarvis, the phrase was limited to notices which themselves terminated tenancies e.g. notices to quit.
Issue 2: Consequences of breaching section 7
Mr Jarvis’ main contention was that section 7, 2014 Act resulted solely in criminal liability and did not affect a section 8 notice’s validity for possession proceedings.
The Court rejected that argument at .
- The fact that subsection (5) of section 7, 2014 Act provides for contravention of subsection (1) to be criminal offence, did not detract from the general prohibition within subsection (1) that a landlord “must not do” any of the things described in subsection (2) which, includes, “serving notice to terminate a tenancy”
- Section 44 of the 2014 Act renders a section 21 notice ineffective if served by a landlord who is not registered or licensed. Failure to comply with a provision stating that a notice “may not be given” thus results in invalidity. If a notice given when a statute has said that it “may not be” or no notice “may be given” can be nugatory, a provision stating that a landlord “must not” serve a notice must also be capable of implying invalidity.
- Judge Jarman QC’s remarks in Evans v Fleri that “It would be surprising if the intention had been to make the serving of a notice to terminate a tenancy by an unlicensed landlord a criminal offence and yet allow that landlord to obtain a possession order in reliance upon such a notice” have force.
- Tenants would to a great extent be reliant on local authorities who have many other demands on limited resources for enforcement of the system of registration and licensing introduced by the 2014 Act if notices served in breach of the regime were nonetheless effective. The Assembly will have been aware of this when enacting the 2014 Act, which was evidently designed to benefit tenants. That tends to suggest that the Assembly would not have wished to leave tenants dependent on local authorities and, hence, that it would not have intended a notice served in contravention of section 7 to be effective.
- It is plain from the 2014 Act that contractual obligations are not negated by breaches of its registration and licensing regime. Be that as it may, however, what is at issue on this appeal is not the validity or enforceability of any provision of a tenancy, but rather whether a notice served in compliance with a statutory provision is effective.
As noted in the judgment, housing law in England and Wales has diverged in some important respects. The new Welsh primary legislation provides additional protection for tenants. Private landlords need to ensure that they are registered and either licensed or instruct an appropriate “authorised agent” to carry out, inter alia, property management. If landlords get it wrong, it can lead to lengthy and costly proceedings.
For tenants, this judgment should be welcomed news. The legislation was introduced to, amongst other things, help improve standards in the private rented sector and lead to raised awareness by landlords of their rights and responsibilities. This has been recognised by the Court of Appeal and the judgment should go some way to ensuring that landlords do comply with requirements which, in turn, will hopefully lead to standards improving in the private sector in Wales.
Sarah, Christopher and other members of the housing team have been involved in representing and advising both social landlords and tenants in relation to this scheme. If you would like any advice on these issues or any related matters, our housing barristers can help, please contact our clerks for details.