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A change in the Law regarding Deposits taken by Landlords and provision of the Prescribed Information to Tenants

A change in the Law regarding Deposits taken by Landlords and provision of the Prescribed Information to Tenants

Finally Parliament has put an end to years of confusion which has reigned in legal terms as to the exact duty of Landlords in relation to a tenant’s deposit at the end of an Assured Shorthold Tenancy. Shaun Burke , partner of Close Thornton Solicitors, sheds some light.

In recent years some Landlords have faced fines relating to the protection of a tenant’s deposit if a tenant stays in occupation of the property after the end of a fixed term Assured Shorthold Tenancy (AST).

The problem was highlighted in June 2013 when the case of Superstrike v Rodrigues was heard at the Court of Appeal. The Judge confirmed that once a fixed term AST has expired, the statutory periodic tenancy which arises is in fact a new tenancy.

Therefore, if a deposit is held for the expired fixed term, the deposit will be taken as having been received (again) by the Landlord at the start of the statutory periodic tenancy. So far so good.
However for all statutory periodic tenancies starting after 6th April 2007, the Landlord is also required to serve certain information on the tenant confirming that the deposit has been protected (known as the Prescribed Information).

It follows that when the new statutory periodic tenancy arose, the deposit had to be re-protected and the Prescribed Information served again. In most cases the deposit remained untouched and therefore still protected, but Landlords invariably did not re-serve the Prescribed Information. This put them unknowingly in breach.

This was confirmed in May 2014, in a County Court case in Birmingham (Garder v McCusker), which ruled that, while the deposit was re-protected, the Landlord was still required to re-serve the Prescribed Information and failure to do so could lead to a fine up to 3 times the value of the deposit plus return of the deposit in full.

This seemed grossly unfair particularly as the Prescribed Information had been given to the tenant when the original tenancy had been entered into.

Parliament has now stepped in to rectify this. The Deregulation Act 2015 became Law on 26th March 2015. Under the legislation provided that the Prescribed Information was served on the tenant when the Assured Shorthold Tenancy was entered into and the deposit protected, there is no longer a need to re-serve the Prescribed Information when the Assured Shorthold Tenancy ends and a statutory periodic tenancy arises. The law now states that having served the Prescribed Information it is deemed served again when the periodic tenancy arises.

Landlords still need to be on their guard however. They can still be fined up to 3 times the value of the deposit and have to return the deposit if they fail to protect the deposit and serve the Prescribed Information on the tenant at the start of the original Assured Shorthold Tenancy. Furthermore they would not be able to apply to the Court for possession of the property under Section 21 HA (the accelerated possession procedure) unless they can prove that any deposit paid was protected.

For further information about this or other aspects relating to the Tenancy Deposit Scheme, please contact Shaun Burke on 01325 or email him on shaun.burke@close-thornton.co.uk

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