Northwood Solihull: A victory for Landlords

Since the beginning of the COVID-19 pandemic landlords might have been feeling like the world was conspiring against them. And perhaps rightly so. 2020 was certainly not a good year for those letting or managing property. With lockdowns, temporary bans on evictions, greater requirements for notices seeking possession and the adjourning of possession proceedings some may have wondered if they would ever get their properties back. All this of course while many landlords saw levels of arrears continue to rise, fully aware that in many cases this money would most likely never be recovered. But could it get worse?

Unfortunately, it seemed so. The case of Northwood Solihull v Fearn & Ors [2020] EWHC sent ripples through the rental market. Without delving too deeply into the facts of the case, the outcome was (for a while at least) that for the purposes of a deposit taken and protected by a corporate landlord, or a landlord represented by a corporate managing agent, the confirmatory certificate needed to be signed in accordance with s.44 of the Companies Act 2006. That is to say, two authorised signatories needed to have signed the certificate, or a company director in the presence of a witness.

This may have had one of two effects on Landlords. It either sent landlords scrambling through their paperwork to check on their confirmatory certificates, or it completely passed them by and had no effect on them whatsoever. However, the implications were serious for those seeking to regain possession of their properties through both the processes as set down by s.8 and s.21 of the Housing Act 1988, and those landlords or managing agents to whom Northwood Solihull applied might have got a nasty shock at the possession hearing.

The effect of the High Court decision was that s.21 evictions would not be available to corporate landlords, or landlords who instructed corporate managing agents, who had not complied with the requirements of s.44 of the Companies Act within the deposit confirmatory certificate. Furthermore, they were exposed to a claim against them from their tenants under ss.213 and 214 of the Housing Act 2003. This claim could be used by tenants as a way of off-setting rent arrears owed to the landlord, potentially also defeating a s.8 eviction.

In one recent case I was instructed by a landlord who had served a s.8 notice with a view to regaining his property. Within that notice he had relied solely on ground 8 (Schedule 2 of the Housing Act 1988), for which the requirements are that at least 2 months’ rent must be due both at the time of service of the s.8 notice and at the time of the possession hearing. His confirmatory certificate had been signed by a single employee of a corporate managing agent. Counsel for the Defendant argued that the claim should be dismissed on the basis of Northwood Solihull. It was argued that when the amount due to the Defendant under s.214 of the Housing Act 2003 was set off against the rent arrears there were not two months’ worth of arrears owing at the time of the possession hearing. As only ground 8 was relied on, grounds 10 and 11 having not been used, opposing counsel submitted that the Judge had no discretion to make a possession order but had to dismiss the claim. However, as the Judge did not have sufficient time in the hearing to hear legal argument, he adjourned the claim, conscious of the fact that the Northwood Solihull case had just been heard again in the Court of Appeal and that this defence might no longer be available to the Defendant at the adjourned hearing. This was scant consolation for my client when the Defendant was continuing to refuse to pay the rent.

Felix Dies!

Don’t worry. Felix is, I’m sure, absolutely fine. But classicists among you may appreciate my attempt at resurrecting schoolboy Latin. In short – happy days for landlords! The Court of Appeal judgment (the hearing of which provided riveting viewing on HMCTS YouTube channel) came soon after my client attended court and the collective sigh of relief was audible. No longer will s.44 of the Companies Act apply to confirmatory certificates. The signature of one authorised agent will suffice. In my case referred to above, there will no longer be a defence to the claim for possession and landlords up and down the country will no longer find themselves exposed to potential claims under ss.213 and 214. The status quo has been restored and common sense prevailed.

I appreciate this article is something of a non-story, the problems for landlords raised by the High Court in Northwood Solihull having now been dismissed by the Court of Appeal. However, as this case was directly relevant to a matter I was instructed on, and as I know somewhere that my client will be highly relieved, I thought it well worth the time to briefly explain the story of Northwood Solihull. If nothing else, it is a bedtime story that I feel confident will send the children straight to sleep!

The team at Becket Chambers have a wide expertise in all Landlord and Tenant matters. For any enquiries in this field please do not hesitate to contact our clerks at clerks@becket-chambers.co.uk