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Advice for landlords after recent tenancy deposit ruling

View profile for Helen Porter
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The Government has now responded to the Court of Appeal’s recent ruling on another tenancy deposit issue which has caused consternation for many landlords.  Here Helen Porter, Head of Warner Goodman Commercial’s litigation department, reviews the case and advises how landlords should proceed.

In a judgment given in Superstrike Limited v Rodrigues [June 2013] the Court of Appeal looked at the issue of a deposit paid by the tenant for a tenancy entered into before the tenancy deposit protection (TDP) legislation came into force on 6th April 2007.  In Superstrike, the original fixed term tenancy expired in January 2008.  The tenant remained in occupation, and so a statutory periodic tenancy was created.  In this case, the landlord continued to hold the original deposit made at the beginning of the initial lease.

In June 2011, the landlord served a notice requiring possession of the property under section 21 of the Housing Act 1988.  Possession proceedings were subsequently issued, however the tenant argued that as the deposit was not protected when the section 21 notice was served, the notice was therefore invalid.

The Court of Appeal agreed.  The landlord was refused possession because when the new statutory tenancy was created in 2008, the landlord ought to have repaid the deposit to the tenant under the fixed term tenancy, who should then have paid a new deposit immediately to the landlord for the new statutory periodic tenancy.  The landlord should then have protected the deposit under the tenancy deposit scheme.

Helen advises caution for landlords whose tenants moved in prior to 6 April 2007 and who remain in occupation as periodic tenants after the fixed term ended.  If this is the case, the deposit will need to be returned and a new deposit received and protected before any section 21 notice can be served.

However, in a recent letter from the Minister for Housing to the Residential Landlords Association, Mr Mark Prisk MP has advised that the TDP legislation was never intended to affect those tenancies where a deposit was taken for an assured shorthold tenancy before its introduction and thereafter continued as a statutory periodic tenancy after 6 April 2007.  It is understood that the Housing Minister is exploring whether new legislation is required to clarify the situation.

If you are a landlord looking for advice on TDP legislation, contact Helen or the litigation team on 02380 717717 or visit their website www.warnergoodman.co.uk.

ENDS

This is for information purposes only and is no substitute for, and should not be interpreted as, legal advice.  All content was correct at the time of publishing and we cannot be held responsible for any changes that may invalidate this article.