Switaj v McClenaghan: Temporal Limits on “Prohibited Payments” and Section 21 Notices under the Tenant Fees Act 2019

Introduction

The Court of Appeal’s decision in Switaj v McClenaghan ([2024] EWCA Civ 1457) addresses a lacuna in the operation of the Tenant Fees Act 2019 (“TFA”) where historic, pre-Act payments intersect with later tenancies created after the Act’s commencement. At its core, the appeal asked whether administration and check-out fees—lawfully demanded and paid in 2018—could retrospectively contaminate a fresh assured shorthold tenancy (“AST”) granted in 2021, thereby invalidating a section 21 Housing Act 1988 notice served in 2023. The tenant (Ms Switaj) argued that earlier fees “carried forward” and thus operated as prohibited payments which engaged TFA s.17(3) and barred the notice. The landlord (Mr McClenaghan) contended that the relevant “requirement” and “payment” pre-dated the Act and fell outside its reach. District Judge Redpath-Stevens sided with the landlord; the Court of Appeal has now confirmed that view, setting an authoritative temporal boundary to the TFA’s prohibition regime.

Summary of the Judgment

The Court dismissed the tenant’s appeal and upheld the possession order.
Pre-commencement fees (administration and check-out) required and paid before 1 June 2019 are not “prohibited payments” for the purposes of s.1 and s.17 TFA in relation to later tenancies.
A landlord must “require” a payment in consideration of, or pursuant to a term of, the tenancy alleged to be tainted. Passive retention of historic funds is neither a new requirement nor a new payment.
Superstrike Ltd v Rodrigues (2013) was distinguished: that case concerned the automatic statutory requirement to protect deposits on the formation of a fresh periodic tenancy; by contrast, no equivalent continuing requirement existed here.
Consequently, the section 21 notice served in June 2023 was valid and enforceable.

Detailed Analysis

1. Precedents Cited and Their Influence

a. Superstrike Ltd v Rodrigues [2013] EWCA Civ 669

Superstrike held that an unprotected tenancy deposit became subject to Housing Act 2004 requirements when a statutory periodic tenancy arose, because the deposit was deemed re-paid and re-received at that point. The tenant invoked this analogy to argue that the 2018 check-out fee should be treated as notionally “re-paid” and “re-received” on each renewal, crystallising a fresh prohibited payment under the TFA.

The Court rejected the analogy for three reasons:

Different statutory language. TFA s.1 hinges on a landlord “requiring” a payment; Housing Act 2004 s.213 is triggered merely by the existence of a deposit.
Contractual foundation absent. The 2021 AST omitted any obligation to pay administration or check-out fees; therefore no ongoing requirement paralleled the deposit clause in Superstrike.
Temporal demarcation. Section 30 TFA expressly disapplies s.1 to requirements imposed before 1 June 2019, a statutory feature not present in the deposit legislation considered in Superstrike.

b. Efobi v Royal Mail Group Ltd [2021] UKSC 33

Cited to articulate the flexible nature of factual inferences. Andrews LJ emphasised that tribunals should use common-sense inferences, but here there was no evidential basis obliging the District Judge to infer a continuing requirement.

2. The Court’s Legal Reasoning

Meaning of “require”. The Court adopted the ordinary, compulsory connotation: an overt act or stipulation by the landlord. Silence or passive retention does not suffice.
Statutory architecture of s.1(6). The sub-paragraphs set out exhaustive (“if and only if”) circumstances that constitute a requirement. Each scenario preserved a contractual or consideration-based nexus; none applied to dormant, historic funds.
“In consideration of”. Read in its orthodox contractual sense—payment exchanged for the grant or renewal of the same tenancy. The 2018 fee was consideration for the 2018 AST alone; it could not morph into consideration for the 2021 AST.
Sequential test in s.17(1). First, a breach of s.1(1) by requiring a prohibited payment; second, an actual payment “as a result of” that requirement. The causal chain broke because the only payment occurred three years before the tenancy in question and before the Act itself.
Transitional provision (s.30). Statutory confirmation that s.1 does not apply to pre-commencement requirements; the legislative intent is prospective, not retrospective.

3. Impact on Future Litigation and Practice

Section 21 landscape. Landlords may confidently serve section 21 notices notwithstanding pre-2019 fees, provided no fresh prohibited payments were demanded post-commencement.
Drafting of new ASTs. Practitioners should ensure any historic, non-refunded sums are not resurrected in new contracts. If the clause is removed—as here—risk is largely neutralised.
Litigation strategy for tenants. Challenges must focus on demonstrable post-2019 requirements; indirect or “notional” carry-overs are unlikely to succeed.
Clarification of “requirement”. The Court’s insistence on an overt act narrows the scope of what can be argued to be a “requirement”, limiting opportunistic or speculative claims.
Distinction preserved. The decision delicately avoids undermining Superstrike; it remains good law for deposit protection, but its reach is carefully cabined to that statutory regime.

Complex Concepts Simplified

Assured Shorthold Tenancy (AST): The default private residential tenancy in England, giving landlords a streamlined possession route via section 21 notices.
Section 21 Notice: A no-fault eviction notice. Certain statutory conditions (e.g., compliance with TFA, deposit protection, licensing) must be satisfied before it is valid.
Prohibited Payment (TFA): Any charge demanded from a tenant that is not expressly allowed by Schedule 1 (e.g., rent, capped deposit, holding deposit). Examples include administration fees, check-in/check-out fees, reference fees.
Requirement: An overt act (clause or demand) by which the landlord obliges the tenant to make a payment, enter a contract, or grant a loan.
In consideration of: A contractual phrase indicating an exchange—“X is granted in return for Y.”
Transitional Provision: Legislative rule governing how new law applies to events that occurred before its commencement, often protecting vested rights or settled expectations.

Conclusion

Switaj v McClenaghan decisively delineates the temporal reach of the Tenant Fees Act 2019. A landlord’s historic, pre-Act fees—even if arguably unfair—do not taint subsequent tenancies where:

No fresh demand is made; and
The later tenancy agreement omits the impugned clauses.

The Court clarified that “requirement” demands an affirmative act, and “in consideration of” preserves its orthodox contractual meaning. By distinguishing Superstrike, the Court confined deposit-specific jurisprudence to its statutory context, averting an unwarranted expansion of tenant fee restrictions. Going forward, landlords, tenants, and advisers have a clear roadmap: focus on post-1 June 2019 conduct and express contractual terms when assessing the validity of section 21 notices under the TFA regime.