Following a recent appeal court decision, landlords need to take extra care when renewing tenancies or when tenancies become periodic tenancies as it is easy to fall fowl of this legislation.
Since the tenancy deposit protection legislation came into force on 6th April 2007 through the Housing Act 2004, there has been a raft of cases interpreting the effects and pitfalls for landlords in the private sector.
This subsequently led to amendments to the provisions which were largely viewed as a badly drafted piece of legislation. The amendments took effect from 6th April 2012 as part of the Localism Act 2011.
The latest twist in the life of this legislation came very recently on 14th June 2013 in the Court of Appeal’s decision in Superstrike Limited v Marino Rodrigues  EWCA Civ 669.
Lord Justice Lloyd’s Judgement in that case creates a number of issues and potential problems for landlords protecting tenants’ deposits. The determination of the Court of Appeal provides that as a statutory periodic tenancy constitutes a new tenancy, the landlord is obliged under Section 213 of the 2004 Act to provide the tenant with the necessary information before it is allowed to rely upon any Section 21 Notice and to protect itself from a claim by the tenant for the return of the deposit and compensation.
Lord Justice Lloyd determined that when the fixed term ends any deposit held by the landlord for the fixed term tenancy is treated as having been paid to the landlord in respect of the new tenancy, by way of set off against the landlord’s obligation to account to the tenant for the deposit in respect of the previous fixed term tenancy.
It is therefore necessary for landlords to send the relevant information to the tenant upon the coming into force of a statutory periodic tenancy and most likely to effectively re-register (with any incumbent fee) the deposit and new tenancy with the deposit scheme that the deposit is placed.
The terms and conditions of the particular deposit scheme that the landlord uses would be determinative of any renewal fee or procedure and that should be looked at by all landlords urgently. We understand that a number of deposit schemes are already taking legal advice in respect of this decision and the consequences for the deposits that they currently hold.
Note to Landlords
It is therefore very important for all landlords to pay very careful attention to the term dates of their assured shorthold tenancies and when statutory periodic tenancies come into force so that they can ensure that the legislation is complied with and that their remedies for possession under Section 21 are preserved and that they do not leave themselves open to claims by the tenant for failing to comply with the relevant rules.
Please do not hesitate to contact Neil Curbison, a partner in the Property Litigation Department at Colman Coyle Limited to discuss any property related disputes.