Apportioned Rent Repayment After A Section 21 Notice
Section 40 Deregulation Act 2015 commences in England on 1 October 2015. This section will insert a new section 21C into the Housing Act 1988.
The common law position is that where a tenancy ends midway through a period of a tenancy, the landlord is nonetheless entitled to receive the full payment of rent for the full period.
The new section 21C will change this for some circumstances in England and may require a repayment of rent apportioned daily where the tenant ceases occupation mid-way through a rental period of the tenancy.
A tenant under an assured shorthold tenancy of a dwelling-house in England is entitled to a repayment of rent from the landlord where—
- as a result of the service of a notice under section 21 the tenancy is brought to an end before the end of a period of the tenancy,
- the tenant has paid rent in advance for that period, and
- the tenant was not in occupation of the dwelling-house for one or more whole days of that period.
The amount of repayment to which a tenant is entitled is calculated as follows—
Rent x number of whole days remaining in the period that the tenant is NOT in occupation / whole days in that period.
For example, the tenancy periods (rent days) are the 1st to last day of a month and the tenant leaves at 10am on 15 March. The rent is £850 per calendar month. The calculation would be:
£850 (rent) x 16 (days not in occupation) / 31 (days in period) = £438.71 to be returned (assuming the tenant had paid the £850 in advance).
It is important to note that the calculation relates to “whole” days. In this example we assume the tenant vacated at 10am on the 15th March. As a result, the calculation effectively starts from the 16 March to 31 March inclusive (16 whole days in total).
If the repayment of rent has not been made when the court makes an order for possession under section 21, the court must order the landlord to repay the amount of rent to which the tenant is entitled.
Nothing in these rules affects any other right of the tenant to a repayment of rent from the landlord for example compensation for a failure to repair.
Subject to the next paragraph, none of the rules discussed in this article apply to an assured shorthold tenancy granted before 1 October 2015 nor to any statutory periodic tenancy arising on or after 1 October 2015 where the original tenancy was granted before 1 October 2015.
From 1 October 2018, the rules discussed in this article will apply to ALL assured shorthold tenancies in England including any that were granted before 1 October 2015 (or went statutory periodic).
This could prove problematic because what does “as a result of the service of a notice under section 21 the tenancy is brought to an end” mean?
If a section 21 is served and the tenant leaves in one week which is also a week into a period, does 3 weeks rent need to be repaid (assuming they have paid for that month)? Did the tenant leaving “end the tenancy” or was the landlord entitled to reject that offer to surrender? A section 21 NEVER ends a tenancy – it is the bailiff executing a possession order after service of the notice that ends the tenancy 1.
What if the tenant had previously given verbal notice of their intention to leave in a week which the landlord accepted but the landlord served a section 21 as a backup? The tenant leaving ended the tenancy but this was as a result of them wanting to leave, not as a result of the section 21 notice?
A puzzling question is how is it that the court must order the rent repayment at the time of the possession order? In most cases, the mere fact that the landlord is in court obtaining possession indicates the tenant remains in occupation at the time of the order. Yet, if no repayment has been made at that time, “the court must order the landlord to repay the amount of rent to which the tenant is entitled.“. This will be an entirely unknown amount because as yet it is unknown if the tenant will leave soon or wait for the bailiff which could be weeks away. I suppose the order could just say along the lines “the claimant shall repay any amount the tenant is entitled to under section 21C” as a catch all?