So, I gave a talk on the deposit scheme post Localism Act on Tuesday morning, then surface to immediately find word of a new wheeze being tried by landlords. Just how quickly can one become outdated?
The Housing Act 2004 as amended by the Localism Act 2011 and in force from 6 April 2012 appears to say that if a deposit has not been protected within 30 days (or by 7 May 2012 for deposits taken before 6 April 2012), then no section 21 notice may be served unless the deposit (with agreed deductions) has been returned to the tenant or dealt with in s.214 proceedings by court order.
The new wheeze, being used by landlords who failed to protect, served a s.21 and are now seeking to rely on it, goes something like this…
The relevant parts of s.215 are:
(1) [Subject to subsection (2A),] if a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy at a time when—
(a) the deposit is not being held in accordance with an authorised scheme, or
(b) section 213(3) has not been complied with in relation to the deposit.
(2A) Subsections (1) and (2) do not apply in a case where—
(a) the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant, or
(b) an application to a county court has been made under section 214(1) and has been determined by the court, withdrawn or settled by agreement between the parties.
The argument being that (2A)(a) means that once the deposit has been returned to the tenant, (1) does not apply, with effectively retrospective effect, so any s.21 previously served is valid once the deposit has been returned, and the notice can be relied on in possession proceedings. (Accelerated proceedings couldn’t be issued in the meantime, as the landlord must declare the deposit protected or no deposit taken. Further, there would be the added complication of whether the s.21 was valid – as in served – at the date of issue of the claim).
Now, it has to be said that (2A) could have been more precisely worded – ‘ceases to have effect’, say, or even just ‘do not apply in a case once..’. But at the same time for a clause to have retrospective effect, one would expect to see that clearly specified. I would put myself on the ‘no retrospective effect’ side of the argument. For the issue of whether the tenant had in fact been served with a s.21 to turn on whether the landlord had at some later point returned an unprotected deposit to the tenant, strikes me as going against all certainty of notice.
But the fact that the opposite is arguable will no doubt mean some landlords succeeding on this point in the County Court.
I have an awful suspicion that this one will be destined for a higher court, just when we thought deposit scheme issues had been more or less sorted out.