Switaj -v- McClenaghan: Court of Appeal Clarifies Tenant Fees Act Impact on Section 21 Notices

Summary: The Court of Appeal has delivered a significant ruling confirming that fees paid by tenants before the Tenant Fees Act 2019 (TFA) came into force do not automatically invalidate subsequent section 21 possession notices, provided later tenancies comply with the Act. This decision offers much-needed clarity for landlords and agents regarding historic fees and their effect on tenancy agreements post-TFA.

Background to the Case

The Court of Appeal examined whether fees paid by a tenant prior to the Tenant Fees Act 2019 could render a landlord’s section 21 notice invalid under the Housing Act 1988. The case arose from a tenancy agreement entered into in April 2018, before the TFA was enacted.

Ms Switaj, the appellant, rented a flat in Holloway under a 12-month assured shorthold tenancy (AST) starting in April 2018. Alongside rent and a deposit, she paid two additional fees to the landlord’s agents: a £120 plus VAT administration fee for preparing renewal documents and an unspecified check-out fee. These payments, referred to as the “Original Fees,” were made in March and April 2018, before the TFA came into effect on 1 June 2019.

Subsequent tenancy agreements were signed in 2020 and 2021, deliberately drafted to comply with the TFA and did not require payment of the earlier fees. However, in June 2023, when the landlord served a section 21 notice to regain possession, the tenant challenged its validity, arguing that the earlier fees—now prohibited under the TFA—invalidated the notice.

First-Instance Decision

At first instance, the tenant relied on the precedent set by Superstrike Ltd v Rodrigues [2013] EWCA Civ 669, contending that the obligation to pay the fees under the original tenancy carried forward into the later agreements. However, District Judge Redpath-Stevens rejected this argument, ruling that the later tenancy agreements did not require payment of the original fees and therefore did not breach the TFA.

Key Issues Considered by the Court of Appeal

The Court of Appeal accepted that if the Original Fees had been required after 1 June 2019, they would be prohibited under the TFA. The court focused on two main questions:

1. Whether the Superstrike ruling applied by analogy to this case.
2. Whether the landlord’s retention of the Original Fees could itself amount to a “requirement” under the later tenancies, thus contravening the TFA and invalidating the section 21 notice.

The Court of Appeal Judgment: A Landmark Clarification

Distinguishing the Superstrike Case

Lord Justice Lewison clarified that while a payment might sometimes be “required” for the purposes of the TFA even without explicit contractual wording, mere silence or retention of fees does not create such a requirement. The landlord’s retention of the Original Fees after the TFA came into force did not amount to a demand for payment under the later tenancy agreements.

Retention of Fees Does Not Constitute a “Requirement” Under the TFA

The tenant proposed an innovative argument that the landlord’s retention of the check-out fee implied a continuing requirement to pay it. The Court firmly rejected this, noting:

• The fee was required and paid before the TFA came into effect.
• It was never required again under subsequent tenancies.
• There was no factual basis to infer a continuing requirement.

Lord Justice Lewison emphasised that section 1(6) of the TFA focuses on contractual obligations, and section 17(1) requires a payment to be caused by a “requirement” under the tenancy, which was not the case here.

Implications for Landlords and Agents

This ruling provides crucial clarity for landlords and letting agents navigating the complex interaction between historic tenancy fees and the Tenant Fees Act. It confirms that fees lawfully paid before the TFA do not automatically invalidate later section 21 notices, provided that subsequent tenancy agreements comply with the Act and do not require prohibited payments.

For landlords, this decision reinforces the continued practical utility of section 21 as a possession mechanism while it remains part of the statutory framework. It also underscores the importance of ensuring that all tenancy agreements entered into after 1 June 2019 fully comply with the TFA to avoid challenges to possession notices.

Further Advice and Support

Landlords and agents seeking guidance on tenancy agreements, possession proceedings, or compliance with the Tenant Fees Act and deposit protection can find valuable resources and legal advice through specialist services such as Landlord Advice UK.

References

• Switaj -v- McClenaghan [2024] EWCA Civ 1457 – Full Judgment
• Superstrike Ltd v Rodrigues [2013] EWCA Civ 669
• Tenant Fees Act 2019
• Housing Act 1988, Section 21

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The Court of Appeal ruling in Switaj -v- McClenaghan confirms that fees paid before the Tenant Fees Act 2019 do not invalidate later section 21 notices, providing clarity for landlords on historic tenancy fees and possession rights.

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Switaj -v- McClenaghan: Court of Appeal Clarifies Tenant Fees Act Impact on Section 21 Notices