Tenancy Deposits- The Final Deregulation

Yesterday evening the House of Lords Report stage of the Deregulation Bill passed several important amendments to the tenancy deposit protection legislation under the Housing Act 2004.

Their full effects will take time to work through as they make a lot of small tweaks to the legislation and it will be a while before they are fully understood. There were also important changes to s21 of the Housing Act 1988 which I willl deal with separately.

The changes are designed to deal with a series of major cases and a couple of smaller ones which have raised some areas of uncertainty about the operation of the legislation.

Superstrike

The first big set of amendments are designed to deal with the case of Superstrike v Rodrigues. I have written about this elsewhere but the summary is that landlords must serve the Prescribed Information on tenants and relevant persons on every renewal and when the tenancy becomes periodic. There are two big amendments here:

1. If a deposit was taken before the legislation came into force for a fixed term tenancy which then became periodic after the deposit legislation came into force (ie after 6 April 2007) then all will be forgiven provided that the deposit is protected and the relevant Prescribed Information served within 90 days of these amendments coming into force.
2. If a deposit was taken after 6 April 2007 and protected and the Prescribed Information served then on any renewal it will be assumed that the Prescribed Information was properly served. There is no protection for landlords who never protected the deposit during the initial tenancy but there is forgiveness for landlord who were late in their protection.

These two provisions are effectively retroactive. Current Court proceedings relating to these situations will therefore be terminated when the provisions come into force but costs will not be payable to landlords for that. Closed cases where the time for appeal has passed cannot be reopened due to these changes.

Charalambous

The second big set of amendments is related to the Court of Appeal decision in Chralambous v Ng which I wrote about here. The sunmary is that deposits taken before the legislation began where the tenancy became periodic before the legislation began must also be protected prior to an s21 notice being served. There is no financial penalty in relation to these. The government was clear that this is not what the legislation intended but they have actually altered the legislation to confirm the decision in Charalambous and make it clearer that this is the purpose. Therefore any landlord who is in a similar position with a tenancy that became periodic before the legislation came into force should now protect those deposits. The legislation confirms that there is no financial penalty for this.

Prescribed Information

The government also responded to complaints from the tenancy deposit protection schemes stemming from some County Court decisions about the prescribed information. They have amended this so that it is now clear that where the PI says the landlord’s information must be given then giving the details of an agent who protected the deposit for the landlord at the outset is also acceptable. This removes an area of concern which had been highlighted. In relation to current or ongoing claims these changes also have an element of retroactivity in that they accept that previous provision of an agent’s details will be acceptable.

Conclusion

There remain areas of uncertainty in the legislation which have not been addressed. It is likely that the wording inserted here once it has been properly consolidated and studied will throw up new loopholes and concerns. It is regrettable that this legislation has been evolved through a series of tweaks rather than being written properly or fixed in one sweep back at the time of the Localism Act 2011. I doubt that the many trips this legislation has had to the Court of Appeal are quite over yet. One important upshot of this legislation is that all AST deposits will now need to be in a scheme, irrespective of when they were taken or the tenancy began which should simplify things immensely.

It is not yet clear when all these changes will come into force. It may not be until after the election but they were supported by all sides so I would expect them to come into force irrespective of the outcome.

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