Tenancy Deposit Warning for Landlords

Monday 7th October 2013

Tenancy Deposit Warning Jade Brooksbank, residential property disputes practitioner is warning landlords to be wary of complex tenancy deposit laws as a result of a landmark national case.

In the recent case of Superstrike vs Marino Rodrigues, the tenant's fixed assured shorthold tenancy rolled into a statutory periodic tenancy. As the original tenancy was created before the introduction of mandatory tenancy deposit protection laws in April 2007, the landlords did not protect the deposit as they were under no obligation to do so.

The statutory periodic tenancy began after the introduction of the legislation.

When the landlords came to serve a Section 21 notice to end the tenancy, they were told they did not have the right to do so and that the notice was invalid because they had not complied with the new tenancy deposit regulations.

The Court of Appeal ruled in favour of the tenant, stating that the statutory periodic tenancy created a new agreement, and as such, the deposit should have been protected and the prescribed information should have been served again.

Jade Brooksbank, residential property disputes practitioner says that many landlords are not aware of the impact this ruling may have. "This case dealt with a tenancy agreement which began before the introduction of the tenancy deposit rules. However, as this case confirms that a statutory periodic tenancy is a new tenancy, the question remains whether deposits that have already been protected need re-protecting and whether the prescribed information needs to be re-served whenever a statutory periodic tenancy is created. Although these issues were not addressed within the Superstrike case it is something which needs to be considered."

"Unfortunately, as a result of this ruling, if the Court were persuaded that the already protected deposits and prescribed information needed to be re-protected and re-served, then many landlords will have less power to recover possession of their property and could be subject to a financial penalty of up to three times the amount of the deposit."

"In view of the obvious risks of refunding a deposit to a tenant in occupation, it is likely most landlords will take the risk. As a precautionary measure, landlords could minimise their risks by writing to the tenant within 30 days of the end of the fixed term to confirm the location of the deposit and could re-serve the prescribed information."

Author: Administrator

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