Clarifying the Law around Tenancy Deposit

The Deregulation Act 2015 received Royal Assent and became law on 26 March 2015.

Clarity for Tenancy Deposits

The Act does well to clarify the position in respect of tenancy deposits following the decisions of the court of Appeal in Superstrike v Rodriques and Charolambous v NG.  the Superstrike v Rodriques judgment stated that a statutory periodic tenancy should be treated as a “new” tenancy and determined that deposits that were taken in respect of tenancies prior to the introduction of the tenancy deposit protection regime commenced on 6 April 2007, which either renewed or continued as a statutory periodic tenancy should have been protected or re-protected with up to date prescribed information served on the tenant.  The court of Appeal determined in the Charolambous v NG case that even though a deposit was taken prior to 6 April 2007, because it had not been protected and the prescribed information provided, a Section 21 Notice served on the tenant was invalid.

These cases sought to clarify the issues raised from the drafting of the Housing Act 2004 and subsequently the amendments made to the Act by the Localism Act 2011.

Impact of Deregulation Act 2015

As a result of these cases and the implementation of the Deregulation Act 2015, the following changes must be noted in respect of tenancy deposits:-

1. If you took a deposit on an Assured Shorthold Tenancy prior to 6 April 2007 and have failed to protect it, the deposit must be protected and the prescribed information served in order to be able to issue a valid Section 21 Notice in the future.  In these circumstances, there are no penalties for the landlord’s save as to invalidate a Section 21 Notice.

1. If a deposit has been taken in respect of an Assured Shorthold Tenancy since 6 April 2007 and the landlord has protected the deposit in accordance with the rules and served the prescribed information on the tenant and the tenancy has since become a statutory periodic tenancy or been renewed, then provided the deposit is still protected with the same scheme and the details of the tenancy have not changed, it will be considered that you have complied with the tenancy deposit protection requirements.

1. If a deposit was taken on an assured shorthold tenancy prior to the 6 April 2007 and the assured shorthold tenancy subsequently become a statutory periodic tenancy or has been renewed since the 6 April 2007, then the landlord must protect the deposit and provide the tenancy with the prescribed information by no later than 23 June 2015.  Failure to do so will result in an inability to serve or issue a valid Section 21 Notice and the landlord will be liable for civil penalties for non compliance until the deposit has been protected.

1. In considering the prescribed information that must be provided to the tenant, the Act allows for the agents details to be provided where they have taken and protected the deposit on the landlord’s behalf.

It is important to note that where a landlord currently holds a deposit but has not placed it within an appropriate scheme and provided the prescribed information, the landlord must do this by 23 June 2015 in accordance with the third bullet point above.

It is important for all landlords to review their tenancies in order to ensure compliance with these rules so as to avoid any penalties.

If you would like more information, please contact specialist landlord & tenant Craig Court on 01633 244233 or e-mail courtc@hevans.com