The Department for Communities and Local Government has published details of amendments to the Deregulation Bill to amend the Housing Act 2004:
a) Require the protection of any deposit taken under an assured shorthold tenancy, whether taken before or after the commencement of the tenancy deposit legislation in April 2007;
b) Avoid the need to re-protect the deposit and re-serve the prescribed information upon the renewal of a tenancy upon the renewal of a tenancy or upon a statutory periodic tenancy arising on the expiry of a fixed term
Pre-April 2007 deposits to be protected
The proposal amendments require any deposit taken before the introduction of the tenancy deposit legislation in April 2007 which is not yet protected, must be protected within 90 days of this provision coming into force. Prescribed information will also need to be served. This amendment will undoubtedly catch out a number of landlords.
Our advice is that if you are holding an unprotected deposit which pre-date April 2007 protect it now to avoid the risk of forgetting once the amendments are brought into force!
No need to re-protect the deposit and re-serve the prescribed information upon a statutory periodic tenancy arising
The controversial case of Superstrike v Rodrigues (2013) EWCA Civ 669, left open the question for landlords and managing agents of whether it is necessary to protect the deposit and reserve the prescribed information again where a fixed term has expired and a statutory periodic tenancy arisen.
In the recent County Court case of Gardiner v McCusker (Birmingham County Court) the Court found that the requirement under s213 of the Housing Act, to protect the deposit and serve the prescribed information, arose again when a periodic tenancy was created on the expiry of a fixed term. The implications of this for the landlords were huge – the Section 21 notice was invalid and the landlord was ordered to pay the tenant £1,800 together with the costs of the claim. Although a County Court case and therefore not binding, the decision in this case corresponds with the advice published by the tenancy deposit schemes, who take the view that as the law stands it is a good idea to re-serve the prescribed information when a statutory periodic tenancy arises.
The Department for Communities and Local Government has published details of an amendment to the Deregulation Bill to amend the Housing Act 2004 to avoid the need to re-protect the deposit and re-serve the prescribed information upon renewal of a fixed term tenancy and upon a statutory periodic tenancy arising on the expiry of a fixed term. The proposed amendment operates by deeming a deposit to have not been received when the renewal occurs or when a statutory periodic tenancy arises, provided that the landlord, tenant and property remain the same. Caution should therefore be exercised where a new tenant is added to the tenancy or removed at the time of renewal and the deposit should be re-registered and prescribed information re-served.
Until the amendment comes into force, landlords remain open to claims that the tenancy deposit legislation has not been complied with. Therefore landlords and managing agents should be re-protecting any deposit on renewal or upon the arising of a statutory periodic tenancy and re-serving the prescribed information until the new amendment is in force. This is not added practically by the custodial tenancy deposit schemes that do not allow for a simplified re-protection process.
The Bill had its first reading in the House of Lords on 24 June 2014, having passed through the House of Commons. The time frame for Royal Assent and commencement of the provisions has not been published.
