Tenancy Deposits- Update

Posted: June 24, 2013 | Author: | Filed under: Housing Act, Landlords, Letting Agents, Managing Agents, Possession, Property Law, Rent arrears, Residential Property, Tenancy Deposits, Tenants | Tags: , , , , | 2 Comments

A recent Court of Appeal decision has clarified an issue previously touched on here. The case, Superstrike Limited v Rodrigues [2013] EWCA Civ 669, addressed the position where a deposit was taken before April 2007 (i.e. before the requirement to register a deposit came into force) and the tenancy then became a statutory periodic tenancy after April 2007.

Briefly, the facts of the case were that the tenancy began in January 2007 for a term of 12 months. A deposit was paid at that time and following expiry of the 12 months, the tenancy continued as a statutory periodic tenancy. In June 2011, the landlord served a Section 21 Notice and issued possession proceedings.

The matter found its way to the Court of Appeal, The Court was asked to determine whether the requirements of the deposit legislation applied and, thus, whether or not the failure to register the deposit meant that the Section 21 Notice can be relied upon.

The Court determined the two issues. Firstly, they decided that the statutory periodic tenancy did constitute a new tenancy.

Secondly they considered whether or not the deposit had been received by the landlord in January 2008 when the tenancy became a statutory periodic tenancy. The Court decided that it had been received.

The landlord had argued that the deposit had not been physically received by him in January 2008 and Section 213 of the Housing Act 2004 therefore didn’t apply. The Court determined that the tenant should be treated as having paid the amount of the deposit 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 tenancy. In effect, the original deposit related to the obligations under the original tenancy, not the new periodic tenancy. There was a deemed re-receipt of the deposit by the landlord and, as such, it should have been registered. The possession order was therefore set aside as the landlord cannot rely on the Section 21 Notice that he served.

As previously set out in other articles, where a deposit is to be protected, the landlord has 30 days from receipt of that deposit to do so. Where deposits were received (as deemed in this case) prior to 5th April 2012, protection must have taken place before 6th May 2012 in order to avoid liability for a penalty and in order to avoid problems with relying on a Section 21 Notice.

The case also raises another issue in relation to service of prescribed information. This could also affect the validity of a Section 21 Notice if the prescribed information has not been served within the 30 day period following receipt of the deposit. This issue was not addressed by the Court here but it would follow that if the Court deems that a statutory periodic tenancy arises in circumstances requiring the deposit to be registered then prescribed information shall also be served within the requirements of the legislation.

I’m afraid it’s a case of watching this space as further issues are addressed by the Court.

Landlords in peril with changes to Tenancy Deposit Rules

Posted: May 21, 2012 | Author: | Filed under: Bury & Walkers, Landlords, Letting Agents, Possession, Tenancy Deposits, Tenants | Tags: , , , , , , | Leave a comment

New tenancy deposit rules came into force on the 6th April 2012.  Landlords and their letting agents must comply with these rules in order to avoid payment of a penalty as well as restrictions on obtaining possession of their property.

Since 2007 there has been legislation which provided that if a landlord or their agent failed to protect deposits received under an assured shorthold tenancy then they could be made to pay a penalty and might be restricted from obtaining possession of their property from a non-paying tenant.  Bury & Walkers acted for a number of landlords who successfully challenged numerous claims made by tenants under the existing legislation and acted for landlords in two of the four main cases relating to tenancy deposit claims including the leading case in the Court of Appeal of Honeysuckle Properties -v- Fletcher.

Landlords can no longer delay in dealing with tenancy deposits.  A delay can result in payment of a penalty, up to three times the value of the deposit, and can also effect the landlord’s ability to obtain possession, either by way of a Section 21 Notice or, indeed, a Section 8 Notice.”

Failure to comply with the new rules can lead to a significant and costly delay in obtaining possession.

If you are a landlord and are not sure whether you are complying with the latest tenancy deposit rule changes then please get in contact with me to discuss. You can reach me via email g.archer@burywalkers.com or call me at the Bury & Walkers Leeds office on 0113 244 4227.