Over ten years after the introduction of Tenancy Deposit Protection (TDP) legislation in the Housing Act 2004, which became effective 6th April 2007, Parliament has paid a heavy price for what would seem to have been extremely poorly drafted legislation.
Court case after court case, most famously Superstrike Ltd vs. Marino Rodrigues , has thrown a spoke in the wheel of this poorly thought-out regulation, the latest of which Charalambous and Karali v Ng and Ng  is resulting in an amendment to an amendment in the Deregulation Bill, which is currently progressing through Parliament.
The need for this is because it is thought the decision in Charalambous, preventing the landlord from serving a valid section 21 notice, will affect a large number of landlords with long-term tenants, who thought the TDP rules did not apply to them with regard to long standing deposits they hold.
Following the judgement in Charalambous, the Court of Appeal indicated that if Mrs Ng wished to serve a valid section 21 notice, with her unprotected pre 6th April 2007 deposit, one option open to her would be to comply with section 215(1)(a) Housing Act 2004 by placing the deposit in an authorised scheme and then serving the deposit (s213) notice.
However, there then still remains the uncertainty as to whether s215(1)(b) and s215(2) will apply to landlords in this position and further litigation could ensure.
It would seem therefore that to be certain, only by returning the deposit to her tenants could a landlord in Mrs Ng’s position serve a valid section 21 notice.
However, further uncertainty remains as to what happens if a tenant refused to accept the return of the deposit?
It is clear that Parliament, in addressing the issues of Superstrike in the Deregulation Bill, will need to think again re Charalambous, as the original amendment in the Bill does not go far enough to address the position of all of the unsuspecting landlords.
According to an item released Thursday by the National Landlords Association (NLA), this further amendment should clarify that:
– No matter when a Landlord took a deposit in respect of an AST (before, on or after 6/4/07) they will be unable to serve a s21 if the deposit is not properly protected at the time of service.
– If a Landlord took a deposit on or after 6/4/07 they will be unable to serve a s21 if they failed to comply with s213(3) i.e. the time deadline for compliance.
– A tenant will only be able to apply to the County Court for the financial sanctions if the deposit was taken after 6/4/07
i.e. if a Landlord took the deposit before the law came into force, they just need to protect it before serving an s21. They will not be liable for the financial sanction. But if they took the deposit after April 2007, when they should have complied anyway, they will still be caught by the s21 and financial sanction.
— LandlordZONE (@LandlordZONE) February 5, 2015