Tenancy deposits – I’m confused about the situation with the rules on tenancy deposits. I know there has been a lot of comment following a test case, but I’m worried that I could be liable to a fine. I protected deposits on several tenancies over the last 3 and 4 years, which are still protected, but I’ve done nothing since. What do I need to do?
Following an Appeal Court ruling in favour of the tenant in the Superstrike Ltd v Rodrigues  case, which itself followed two previous hearings ruling in the landlord’s favour, the deposit protection rules were thrown into turmoil.
This resulted in a ridiculous situation where landlords and agents were obliged to re-protect and re-serve the tenancy deposit prescribed information (PI) every time a tenancy was renewed or became periodic.
This situation has now changed again (30 March 2015) following the passing of the Deregulation Bill 2015, which introduced several changes in tenancy rules, particularly those among others affecting tenancy deposits and notices.
The change is included in amendments brought in by the Deregulation Act 2015 which received the Royal Assent on 26 March 2015, and which, as far as the tenancy deposit rules are concerned, comes into force immediately.
The new Tenancy Deposit rules are effective now as follows:
- Where you have a tenancy, with deposits taken before April 2007, but was not protected, and the tenancy has since become periodic after that date, the deposit must now be protected and the prescribed information must be served. You a 90 day period of grace to do this – i.e. until 23 June 2015. If you protect the deposit and serve the Prescribed Information (PI) (s213 notice) within this time, the deposit will be treated as if it had always been protected. If you don’t, you will be in breach – with no excuses! You will be barred from evicting using a section 21 notice and subject to a fine of up to 3 times the original deposit.
- Where a deposit was taken after April 2007 and that was protected and the prescribed information served during the original fixed term, these will be treated as if the prescribed information had been served on every renewal or whenever a statutory periodic tenancy arose – even if the prescribed information was served late initially. A proviso here is that the deposit continues to be protected, within the same deposit scheme. So, thankfully now, you no longer need to keep re-serving the prescribed information on tenancy renewals or when they become periodic. Just one original serving will suffice.
- Where a deposit was taken before April 2007, which became periodic before that date, you are not in breach of the law and you don’t have to protect the deposit now. However the deposit must be protected, or the money returned to the tenant (or the person who paid it), before a section 21 notice can be served. Therefore landlords will not be liable for a financial penalty for not protecting the deposit but will need to take further action if they need to use the eviction process.
These new rules will be no help to landlords who failed to protect a deposit after the legislation became effective April 2007. These amendments deal with the issues which became apparent after the Superstrike decision, primarily the fact that a periodic tenancy is a new tenancy.
Tessa Shepperson, who has been a practising solicitor specialising in property law, says:
“If you are involved in court proceedings for possession, you can take advantage of the new rules, unless your case was concluded some time ago and you are out of time to appeal.”
For letting agents, the prescribed information rules have also been amended to allow agents to serve the PI on behalf of their landlords, with their own details given instead of the landlords’ details.
Changes in Serving Notices
Included in the Deregulation Act are changes which affect the section 21 notice. From 6 April 2015 the section 21 notice will be just one 2 month notice for fixed term and periodic tenancies, in prescribed form, and will no longer need to end on the last day of a tenancy period as was previously the case with the periodic notice.
This should simplify matters considerably and will remove a lot of confusion landlords and agents often had about the critical dates in the notice. In many cases tenants were able to put up a valid defence against eviction when the dates on these notices were wrong.
Perhaps the most important of the other new laws brought in by the Deregulation Act 2015 are those regarding retaliatory or so called “revenge” eviction, but as those are not due to come into force until October.
More detail on this here
The DPS - Guide to Deposits & Disputes
MyDeposits - Guide to Deposits, Disputes and Damages
How to Win Deposit Disputes by Tom Derrett©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law; always seek professional advice. Legislation changes, so check dates on these articles. If you have questions go to the LandlordZONE® Forums