Housing Minister Mark Prisk has launched an urgent inquiry to look at whether new legislation is needed to clarify tenancy deposit protections laws following a controversial Superstrike court ruling.
A recent Appeal Court decision in the Superstrike v Rodrigues case has undermined the current tenancy deposit protection rules and may have left thousands of landlords vulnerable to claims for compensation from tenants.
The judge in the Superstrike case ruled that landlords should re-apply to put deposits on protection when tenancies changed from fixed to periodic agreements.
If a landlord fails to lodge the deposit and issue information to the tenant proving the money is on protection within 30 days, the tenant can demand compensation.
The landlord also faces problems pursuing possession of the property through the courts.
Now, the housing minister has admitted in a letter to the Residential Landlords Association (RLA) that the Superstrike judgment goes against the intention of the law.
“There are concerns that the Court of Appeal decision means that where a deposit was taken for an assured shorthold tenancy before the introduction of tenant deposit protection and continued as a statutory periodic tenancy after 6 April 2007, the landlord should have protected the deposit at the start of the statutory periodic tenancy,” said Prisk.
“This was not the intention of the legislation and we are urgently exploring whether new legislation is required to clarify the situation.
“I understand that concerns have also been raised that the decision could have implications for some tenancies where a deposit has been protected in an authorised scheme in relation to a tenancy begun after 6 April 2007 and the fixed term has expired, and the tenancy continues as a statutory periodic tenancy.
“While the Court of Appeal did not make a decision on these particular facts and we cannot advise on individual cases, as a precaution, landlords could decide to re-issue the prescribed information to their tenant(s) which should ensure they can rely on the section 21 procedure if they wish to end the tenancy. Again, we are exploring whether new legislation is required to clarify the situation.”