3 September 2014 by Yezdan Izzet

Update for Landlords and Agents: Tenancy Deposit Protection Schemes

Most landlords and agents will already be aware that since 6 April 2007, it has been mandatory for landlords of residential properties to place any deposit received from a tenant under an Assured Shorthold Tenancy (AST) into an authorised tenancy deposit protection scheme and provide the tenant with certain prescribed information within 30 days of receipt of the deposit. 

In the 2013 case of Superstrike v Marino Rodrigues, the Court of Appeal held that a tenancy deposit received by a landlord in relation to an AST entered into before 6 April 2007 should have been registered once the fixed term of the tenancy expired after the 6 April 2007 and the tenant remained in occupation under a statutory periodic tenancy.  This is because the statutory periodic tenancy was treated as a “new” tenancy and a new deposit was deemed to have been received, thus triggering the requirements of the tenancy deposit protection rules.  See our earlier blog on Superstrike here.

Superstrike caused some uncertainty about the obligations on landlords in cases where they protected the deposit at the commencement of a fixed term AST, but did not know whether they had to re-register the deposit after the fixed term expired and a statutory periodic tenancy arose.

In the recent case of Gardner v McCuske, the Birmingham County Court directly applied the Court of Appeal decision in Superstrike and decided that where an AST is granted after 6 April 2007 for a fixed term, and the tenancy deposit regulations are complied with at the start of the tenancy, upon the fixed term of the tenancy coming to an end the landlord is required to re-register and re-serve the prescribed information on the tenant within 30 days of the statutory periodic tenancy arising.  Although this is a decision made in the County Court it is likely that other Courts will follow the decision for now.

The effect of Superstrike and Gardner is that landlords must ensure that they comply with the tenancy deposit regulations both at the time of granting a new fixed term AST and after the fixed term expires if the tenant remains in occupation.  Failure to re-register a deposit and re-serve the prescribed information on the tenant, when a fixed term AST converts into a statutory periodic tenancy, will result in the landlord being unable to serve a valid Section 21 Notice terminating the tenancy, until they have re-registered the deposit. The landlord will also be at risk of paying the tenant a fine of up to three times the deposit amount regardless of whether they re-register the deposit.

For further information on tenancy deposits or other landlord and tenant issues, please contact us at info@boltburdon.co.uk

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