How your agency's audit trail can make or break possession court cases

13 April 2022

Audit trails are key to staying compliant - and can be critical to navigating possession proceedings through court for your landlords' properties.

If you need to regain possession of a landlord's property in England through a section 21 or 8 notice, a compliant audit trail of the actions you have taken and communication that you've had with your tenant can be critical if you need to progress your claim to court.

There are many documents that you and your landlords will have to prove you've provided to be entitled to recover possession via these routes. A detailed audit trail can also be key where a tenant attempts to defend a possession claim if they feel you haven’t followed the rules to the strictest letter.

What you may need to prove through a compliant audit trail

Your notice was served correctly

In England, both section 21 and section 8 notices must be in the prescribed form. If you don't use the prescribed form, or include all of the information that's required by the prescribed form, your notice may be invalid.

Where the form 6A (section 21) or form 3 (section 8) is required, you need to use the correct version of the form, applicable at the time the notice is served. Both forms are available on the government website.

The amount of notice you need to provide your tenant can vary depending on the type of notice or grounds for possession you're relying on.

During the pandemic, we also saw these notice periods change significantly, so you should always check the government website for the most up to date notice periods you need to provide.

It's also very important that you allow sufficient time to serve the notice, which again depends on the method that you need to provide the tenant with notice. Not accounting for time for service may also cause your notice to be invalid, or may affect how quickly your case progresses through court proceedings.

If you intend to issue a section 21 notice, you should also understand when a section 21 notice can and can’t be served depending on the status of the tenancy, as a section 21 notice cannot be given within the first 4 months of a tenancy and it cannot expire before the end of a fixed term, unless the tenancy includes a break clause.

You followed tenancy deposit rules

You can only serve a section 21 notice if you've protected your tenants deposits in a relevant scheme - where a traditional cash deposit has been taken - within 30 days of the deposit being received.

You must also provide the tenants, and anyone that's paid the deposit on behalf of the tenant, with the prescribed information relating to the deposit protection within the same 30-day period.

While there's no legislation that prevents a section 8 being served where the deposit hasn’t been correctly protected, your possession claim may still be affected. Non-compliance with the deposit rules can result in a financial penalty for the landlord, up to a maximum of three times the deposit amount.

If your section 8 notice relies on the grounds for rent arrears, any financial penalty may be ordered to be off-set against the arrears that the tenant owes. If that results in the arrears being less than two month’s where ground 8 is cited, the landlord may not be granted a possession order.

If you find yourself in a position where a deposit hasn't been protected correctly, it's always best to seek legal advice before serving any notices.

You shared the property's energy performance certificate, gas safety certificates, and the How to Rent guide with your tenants

If your tenancy was granted on or after 1 October 2015, you must have shared a current copy of the Energy Performance Certificate (EPC) and Gas Safety Certificate (GSC) - where a GSC is applicable - with your tenant before their tenancy begins.

You should also share the GSC from any annual checks completed after they move into the property, within 28 days of the check being carried out.

You must also provide your tenants with the version of the How to Rent Guide that was current when the tenancy started, and at each renewal, if a new version of the guide has been published.

We've seen several court cases over the last few years, going as far as the Court of Appeal, where the requirements specifically relating to provision of the GSC have been challenged by tenants.

The best evidence to overcome these challenges is to have a clear audit trail, which evidences what you provided to the tenant, on what date and by which method.

You charged the correct holding and security deposit amounts

Landlords and agents can only charge their tenants certain fees under the Tenant Fees Act 2019.

There's now a limit to how much tenants can pay for security deposits - at ​​no more than one week’s rent - and holding deposits - no more than five weeks’ rent, where the annual rent of the property is below £50,000, and six weeks’ rent for properties with an annual rent of £50,000 or over.

If you charge too much for either deposit, or charge your tenants any other prohibited payments, you'll need to return the amount you overcharged before you can serve a section 21 notice.

Your landlord has a relevant licence, where necessary

As an agent, it would be best practice to check that your landlords have the relevant licence, even if you aren't fully managing the property - and more so if you are.

Landlords that need an HMO licence or are in a selective licensing area will need to have made an application for a licence before they can issue a section 21 notice.

You communicated with your tenant to try to understand their circumstances

If you've to make a claim for possession, you may need to provide information about your tenants' circumstances, including any knowledge you or the landlord have about the impact the pandemic has had on the tenant.

If you can't provide this, the court may not be able to progress your case, so ensuring you keep a record of all the communications you have with your tenants, including mediation and payment plans where necessary, is important.

How can you simplify your agency's audit trail records?

You'll have to remain vigilant and ensure you have robust systems in place to avoid any errors that may prove costly later down the line. "Can I confidently and easily produce all of the relevant information, knowing that it's accurate and in order?" is the question you should be asking yourself.

You may be able to pull some of the relevant information from your CSM or other lettings providers. Agents using Goodlord's platform, for example, can access a full and timestamped audit trail of emails, safety certificates, and other documents sent to their tenants; the move-in monies paid; the deposit prescribed information; and more, to help prove their compliance.

Plus, for those using Goodlord Rent Collection, agents can even see exactly where a tenant may have fallen behind on rent, if this is the reason for the court case.

That's a lot of ways to package relevant information easily to alleviate those pressures in an already stressful time, when making a claim.

This article is intended as a guide only and does not constitute legal advice. For more information, visit the government's website.

Further reading