25 March 2020 | Comment | Article by Bethan Gladwyn

Does a Registered Social Landlord ever need to be registered with Rent Smart Wales?

Yes, say some tenants. But do they?

This is a question currently being considered by the courts, where a Registered Social Landlord (RSL) has served a Section 21 notice. A recent landmark case for the sector, Hafod v Davis has recently been granted permission to appeal.

 

Background

Starter and demoted tenancies have long been a key tool in a social landlord’s armoury. Indeed, they were the only 2 legal remedies left untouched by the Anti-social Behaviour, Crime and Policing Act 2014. They are essentially assured shorthold tenancies (AST), commonly seen in the private rented sector (PRS).

Those landlords that offer temporary and supported accommodation also use ASTs to ensure a more fluid supply of this much needed accommodation. Ending them requires the service of a Section 21 notice (Section 21 Housing Act 1988). Whilst in the PRS, they can be served for “no fault”, that is of course never the case in the social rented sector. Starter and demoted tenants are entitled to request a review of the landlord’s decision. That is because the court has no power to look at the reasons the notice was served and has no discretion to suspend either the possession order or any subsequent warrant.

In Wales, there is a system of registration and licensing for PRS landlords following the introduction of the Housing (Wales) Act 2014 (the 2014 Act). Its aim is to regulate the PRS by improving standards and seeking to stamp out “rogue landlords”. Private landlords now have to register with Rent Smart Wales under S.4 of the 2014 Act, and have to be licensed under either S.6 or S.7 in order to carry out lettings and management activities (or they must appoint a licenced agent to carry out activities for them). RSLs are exempt from registration and licencing.

One of the prohibited activities for an unregistered and unlicensed landlord is the service of a notice to end the tenancy. Although at S.7 the sanction is a criminal penalty, it is silent as to any other consequences of a notice served in contravention of the 2014 Act, including whether a notice which is served, is as a result, invalid (although this point is being heard by the Court of Appeal in the case of Evans v Jarvis in mid-June).

S.44 specifically prohibits the service of a Section 21 notice by an unregistered and unlicensed landlord. S.44(2) provides that this prohibition does not apply when the landlord has only just become landlord by assignment (and for the first 28 days). However, it does not provide any other exemptions, and in particular it does not repeat the same exemption for RSLs as is contained in the earlier parts of the Act. So, the tenant will argue, the RSL may not need to be registered and licenced generally, but if it is not, S.44 prevents it serving any Section 21 notice, because if the Welsh Government had intended the exemptions which are in Sections 4 and 5 to apply, it would have said so in S.44.

 

Is this a drafting error or intentional?

Mr Davis’ argument was that the exceptions at Sections 5 and 8 simply do not apply. They say that to use a Section 21 notice is optional and if an RSL decides to use Section 21 they must also choose to voluntarily register and become licensed with Rent Smart Wales.

The landlord’s argument is that you cannot read S.44 in isolation. The aim of the 2014 Act is to regulate the PRS. RSLs are already heavily regulated. RSLs are exempt from licencing and registration under the 2014 Act because it would add an additional and completely unnecessary layer of regulation. The consequences of RSLs having to register and licence would be huge both financially and in terms of resourcing. There are questions as to whether Rent Smart Wales’ systems would be able to cope with the number of additional registrations this would require. The alternative is to say that RSLs can simply never serve Section 21 notices again, which effectively removes their ability to use ASTs, demoted and starter tenancies at all. If this truly was the Welsh Government’s intention, they would have consulted with the sector.

The judge, at first instance, agreed with the landlord on the basis that RSLs are exempt from registering and licensing at Sections 5 and 8 and that is the end to it. A possession order was made.

The tenant sought permission to appeal, which was granted on 10 March 2020. When the appeal will take place is anyone’s guess, given the current COVID-19 Coronavirus pandemic. Watch this space for further updates.

If you need help or guidance on the pressures you are currently facing as a result of the COVID-19 Coronavirus outbreak, please get in touch with our housing management team.

 

Key contact

Bethan Gladwyn

t: 029 2267 5569

e: bethan.gladwyn@hughjames.com

 

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.

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