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FIONA SQUIRE of BOYCE HATTON: Landlords beware!

By Herald Express  |  Posted: January 16, 2014

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SINCE April 6, 2007, all deposits taken in connection with an assured shorthold tenancy must be registered with a government approved scheme and the tenant must be provided with prescribed information.

Initially, this had to be done within 14 days of receiving the deposit.

If the landlord failed to register the deposit and the prescribed information and the tenant issued a court action against the landlord for compensation for failing to comply with his obligations, so long as his obligations were complied with before the final hearing, a landlord had a complete defence.

Since April 6, 2012, late compliance with a landlord's obligations is no longer a defence.

In addition, the time to deal with deposits has been extended to 30 days.

If a landlord does not comply with his obligations then a tenant can pursue a civil claim for compensation against the landlord for between one and three times the amount of the deposit for both failing to register and failing to provide the prescribed information.

In addition, any notice served pursuant to Section 21 of the Housing Act 1988 will be invalid and any possession proceedings issued on the basis of that notice struck out.

A recent Court of Appeal decision, Superstrike v Rodrigues has changed the way deposits are viewed.

The facts of the case are an assured shorthold tenancy was entered into in January 2007 i.e., prior to the requirement to register a deposit.

The fixed term expired after April 6, 2007. After the fixed term, no new tenancy was entered into and it rolled over to a statutory periodic tenancy.

The deposit was never registered and the prescribed information not provided. A Section 21 notice was served and the tenant objected on the basis of non-compliance with the landlord's obligations.

The Court of Appeal held that at the end of the fixed term, when the tenancy rolls over to a statutory period tenancy and a new and distinct tenancy is created.

The deposit paid in January 2007 was received again by the landlord in January 2008 at the start of the statutory periodic tenancy. As such, the Section 21 notice failed for not complying with the legal obligations.

Unless this case is appealed, the judgment stands. If a landlord enters into an assured shorthold tenancy prior to April 6, 2007, took a deposit and the fixed term expired after April 6, 2007 then the deposit must be registered and the prescribed information provided. Late compliance is no longer a defence.

Many landlords are now left in limbo as to what to do if they are caught by the decision in this case and secondly what to do at the end of the fixed term tenancy. Dealing firstly with the latter, at the end of the fixed term if the tenancy rolls over to a statutory periodic one, a landlord should check the deposit remains protected by the scheme and re-serve the prescribed information within 30 days of the fixed term expiring.

What landlords should do if they have not complied with their obligations? Guidance on this matter gives three options:

1 Do nothing and rely on the fact the information was provided at the time the deposit was registered.

2 Issue the prescribed information again now despite the fact it will be late.

3 Issue the prescribed information before a Section 21 notice is served.

What should landlords who find themselves caught by the obligation to register the deposit do? If you find yourself in this position then contact a solicitor who will be able to guide you through your best options.

Fiona Squire is our specialist landlord and tenant solicitor and can be contacted at Boyce Hatton on 01803 403403 or at fiona.squire@boycehatton.co.uk

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