Serving a section 21 notice in Wales

The government and first minister of Wales have recently announced plans to scrap “no fault” evictions under section 21 of the Housing Act 1988 (the 1988 Act) in both England and Wales. Until such time as the law is amended, landlords still have the right to evict a periodic assured shorthold tenant using the “no fault” procedure. In doing so, a landlord must first serve notice on their tenant pursuant to section 21(1)(b) or 4(a) of the 1988 Act (the section 21 notice).  In Wales, regulation of the private rented housing sector has been extensively altered by the introduction of the Housing (Wales) Act 2014 (the 2014 Act). It is now mandatory (in Wales only) for all landlords to be registered. Further, a landlord and/or their agent must be licensed before carrying out any property management work in relation to a rented residential dwelling, which includes termination of a tenancy. With the introduction of the 2014 Act, it became unclear whether an unlicensed landlord could serve a section 21 notice on their tenant. The Cardiff County Court case of Evans v Fleri [2019] PLSCS 77 has resolved the issue.  The statutory ambiguity Pursuant to section 7(2)(f) of the 2014 Act, a landlord of a dwelling in Wales subject to a domestic tenancy must not serve a notice to terminate a tenancy unless they are licensed to do so.  The requirement for a landlord to be licensed before terminating a tenancy is clear from the wording of section 7(2)(f) of the 2014 Act. Yet, subsection 44(1) of the 2014 Act is ambiguous. Section 44(1) of the 2014 Act provides that a section 21 notice may not be given in relation to a dwelling subject to an assured shorthold tenancy (AST) if:  “(a) the landlord is not registered in respect of the dwelling, or (b) the landlord is not licensed under this Part for the area in which the dwelling is located and the landlord has not appointed a person who is licensed under this Part to carry out all property management work in respect of the dwelling on the landlord’s behalf.” As a question of statutory interpretation it was unclear whether the use of “or” at the end of section 44(1)(a) was to be construed conjunctively or disjunctively.  The problem On 2 May 2018, George Fleri served a section 21 notice on his tenant, Jake Evans. On expiry of the notice, Fleri commenced possession proceedings against Evans. On the claim form, Fleri indicated that, although he was a registered landlord, he was not licensed and had not appointed a licensed agent to be responsible for property management work in relation to the dwelling. Fleri’s claim for possession was initially struck out by the court on consideration of the papers. The court took the view that Fleri was not licensed when the section 21 notice was served.  Fleri applied to set aside that decision. He argued that for the purposes of the 2014 Act, he was required to be a registered landlord only to enable him to serve a section 21 notice. In reliance on sections 7(2)(f) and 44(1) of the 2014 Act, Evans contended that Fleri was required to be both registered and licensed before he could serve a section 21 notice.  In finding for Fleri, the court noted that an internal conflict existed between section 7 and section 44 of the 2014 Act. Yet, as a matter of statutory interpretation, the court determined that the use of “or” immediately after section 44(1)(a) should be construed disjunctively. The requirement was, therefore, that a landlord had to be either registered or licensed before they could serve a section 21 notice to terminate a tenant’s AST. Evans appealed on the grounds that the court failed to apply section 7 of the 2014 Act and had misinterpreted section 44 of the 2014 Act. Conjunctive not disjunctive In allowing the appeal, HHJ Jarman QC determined that, under the 2014 Act, a landlord had to be both registered and licensed before serving a section 21 notice.  Relying on the Court of Appeal decision in Royal Devon & Exeter NHS Foundation Trust v Atos IT Services UK Ltd [2017] EWCA Civ 2196, HHJ Jarman QC affirmed that as a matter of statutory interpretation the word “or” could be construed conjunctively.  The use of the word “or” after section 44(1)(a) must be construed conjunctively when one had regard to other sections of the 2014 Act and its enacting history.  When one had regard to other sections of the 2014 Act, the requirements for licensing were far more stringent than for registration. To be licensed, a landlord had to prove they were a “fit and proper person” and had undergone the required training. To allow an unlicensed but registered landlord to serve a section 21 notice flew in the face of that, as it would permit a landlord who was not a “fit and proper person” to serve and rely on such a notice rather than being required to have a licensed agent do so on their behalf. Further, section 44 of the 2014 Act had been specifically inserted to prevent an unlicensed landlord from serving a “no-fault eviction notice”. Under section 7(5) of the 2014 Act, a contravention of section 7(1) is a criminal offence and is punishable by an unlimited fine. It would have been surprising if the Welsh Assembly had intended to make the serving of a notice to terminate a tenancy by an unlicensed landlord a criminal offence, but allowed such a landlord to obtain possession in reliance on the same.    Key point A landlord must be both registered and licensed in order to serve a section 21 notice under the Housing (Wales) Act 2014 The use of the word “or” after section 44(1)(a) of the 2014 Act must be construed conjunctively Elizabeth Dwomoh is a barrister at Lamb Chambers