Temporary Exemption Notices and the extended time period for Notices Seeking Possession

Monday, September 28th, 2020 - By Robin Stewart & Nikki Basin, Solicitors at Anthony Gold

When a property is required to be licensed under the Housing Act 2004 but does not have a licence, in some circumstances the landlord or agent, may request a temporary exemption notice instead of applying for a licence. To do so, the landlord or agent must inform the local council about the particular steps they intend to take to ensure that the house no longer requires a licence. This might be changing the use of the property away from HMO use or selling it.

If the local council agrees to serve a temporary exemption notice, this will grant the landlord or agent time to do what is necessary to bring the property outside of the scope of licensing, and during this time the property legally does not need a licence. However, a temporary exemption notice does not grant the landlord an indefinite amount of time; it is instead limited to an initial period of 3 months beginning with the date on which it is served. If there are exceptional circumstances, then the landlord or agent may apply for a second temporary exemption notice in respect of the house granting him another 3 months. In total a landlord may benefit from an exemption of 6 months, and this is only when the local council considers that there are exceptional circumstances.

There is no definition of what constitutes ‘exceptional circumstances’ and each local council will have their own policy in relation to this.

Temporary Exemptions Notice During the Pandemic

The rules relating to temporary exemption notices were designed to operate in a context where landlords can serve a section 21 notice on tenants – a notice which would normally expire after two months. However, recent changes have dramatically increased the amount of notice which landlords must give when serving a section 21 notice.

A summary of the new notice periods for some of the most common grounds for seeking possession can be found below. A more detailed summary of all the grounds and notice periods is available on the government website under the “Technical Guidance on Eviction Notices” (read here).

In addition to the extended notice periods, all possession claims were stayed until the 20 September 2020. That stay was lifted on the 21 September 2020, but most claims are going to progress slowly at both notice stage and once at court. The Master of Rolls published guidance which states that courts should give priority to the following categories of cases:

“(a) Cases with allegations of anti-social behaviour, including Ground 7A of Schedule 2 to the Housing Act 1988 and Section 84A of the Housing Act 1985.
(b) Cases with extreme alleged rent arrears accrued, that is, arrears equal to at least (i) 12 months’ rent or (ii) 9 months’ rent where that amounts to more than 25% of a private landlord’s total annual income from any source.
(c) Cases involving alleged squatters, illegal occupiers or persons unknown.
(d) Cases involving an allegation of domestic violence where possession of the property is alleged to be important for particular reasons which are set out in the claim form (and with domestic violence agencies alerted).
(e) Cases with allegations of fraud or deception.
(f) Cases with allegations of unlawful subletting.
(g) Cases with allegations of abandonment of the property, non-occupation or death of defendant.
(h) Cases concerning what was allocated by an authority as ‘temporary accommodation’ and is specifically needed by the authority for reallocation as ‘temporary accommodation’.”

What this means for temporary exemption notices

The rules relating to temporary exemption notices have not been adjusted to reflect temporary changes to notices seeking possession and possession claims during the pandemic.

Landlords and Agents who previously would have been eligible for a temporary exemption notice on the basis that they intend to evict the tenants may be unable to satisfy the local authority that they qualify for an exemption, because there is little or no chance that they will actually regain possession within a three months (or even six months).

Landlords are going to be much slower to recover possession than usual not only due to the extended notice periods, but also because of delays at court and the fact that many tenants are unwilling to move house during the pandemic.

Landlords who intend to serve a section 21 notice to recover possession will now have to wait six months for that notice to expire. Landlords in that position may struggle to persuade councils that waiting for that notice to expire amounts to ‘exceptional circumstances’ which would permit a second exemption notice to be served. Councils are likely to refuse any requests for exemptions where the landlord cannot demonstrate that they can serve a notice which expires in less than three months. And if the tenants do not move out after the notice expires, unless the claim will be treated as a priority case by the courts, there is little chance of demonstrating that possession can be recovered in the next three months.

This means that landlords who find themselves in a situation where their property requires licensing, a temporary exemption notice may no longer be an option. To avoid prosecution, financial penalties or a rent repayment order, landlords will need to apply for a licence as soon as possible. However, each case will be different and there will still be some cases where a Temporary Exemption Notice application may still be appropriate such as where the tenants have indicated that they intend to leave the property.

The authors of this blog, Robin Stewart (email ros@anthonygold.co.uk) and and Nikk Basin (email nba@anthonygold.co.uk) are Solicitors in the Housing team at Anthony Gold.

Please note that the views and opinions expressed in these blogs are those of the author and do not necessarily represent the views of London Property Licensing. These blogs are designed to stimulate discussion and debate within the property industry. This article does not represent legal advice and should not be treated as such.

For all the latest news and comment, you can sign up for the free London Property Licensing newsletter here.