23/06/2014

Make do and mend: Undoing Superstrike on deposits

The Govt has published the text of the Government amendment to the Deregulation Bill that is proposed to deal with tenancy deposits and specifically the Superstrike position of a new tenancy (and requirement to re-protect the deposit and re-serve the prescribed information) arising when a fixed term ends and a statutory period tenancy begins.

The text of the amendment – a new S.215A to S.215D to the Housing Act 2004 – is at page 10012 onwards in that link and below.

Briefly, the effects appear to be:

  • Where a deposit taken on a fixed term tenancy after April 2007, and protected and Prescribed Info served, this is treated as if they had been complied with for any subsequent statutory periodic tenancy. Once it is in force, there will be no need to re-protect the deposit or re-serve the prescribed information.Where a deposit taken on a fixed term tenancy after April 2007, and protected and Prescribed Info served, this is treated as if they had been complied with for any subsequent ‘renewal’ tenancy for a further fixed term tenancy, or contractual periodic tenancy, provided that landlord, tenant and property remain the same. Once it is in force, there will be no need to re-protect the deposit or re-serve the prescribed information.
  • Where a deposit was taken for a fixed term prior to April 2007, the landlord or agent has 90 days from commencement to protect the deposit. Or, if earlier, before a court determines a s.214 claim, or decides on a s.21 based possession order (or appeal of such an order). If the deposit is protected and prescribed information served within the 90 days, or before the court’s determination on an order, it is as if the landlord/agent had protected initially.
  • Transitional provisions.
    Any s.214 claim or s.21 possession claim which is settled or finally determined before the commencement date is not affected and will be as per Superstrike. Any s.214 claim or s,21 possession claim issued prior to commencement but settled or finally determined after commencement will be decided on the basis of the amendment. However, the court must not order the tenant to pay the landlord’s costs in these cases, so far as they relate to the s.21 possession claim or s.214 deposit claim. The same applies to extant appeals.

Note that ‘finally determined’ means after appeal determined or time period for appeal has passed.

Those advising both landlords and tenants should look at all of this very carefully. There will no doubt be various pressures to speed up proceedings or to slow them down, depending on parties and the types of proceedings. For landlords a section 21 notice can be retrospectively validated by the commencement of the amendment, but may still fail on Superstrike principles up until that date. For tenants, a s.214 claim based on Superstrike is still valid if settled or finally determined prior to commencement.

The clock is ticking on Superstrike defences to possession, and s.214 claims. But I suspect that, as with the Localism Act amends in 2012 and the requirement for all post April 2007 deposits to be protected within one month, there will be a lot of landlords and indeed agents who get caught out by the 90 day provision here. There may not be that many pre-2007 deposits around, but the numbers are not insignificant.

Text of the Amendment

“Tenancy deposits
In Chapter 4 of Part 6 of the Housing Act 2004 (Tenancy Deposit Schemes), after
section 215 insert—

“215A Statutory periodic tenancies: deposit received before 6 April 2007
(1) This section applies where—
(a) before 6 April 2007, a tenancy deposit has been received by a landlord in connection with a fixed term shorthold tenancy, and
(b) on or after that date, a periodic shorthold tenancy is deemed to arise under section 5 of the Housing Act 1988 on the coming to an end of the fixed term tenancy.
(2) If, on the commencement date—
(a) the periodic tenancy is in existence, and
(b) all or part of the deposit paid in connection with the fixed term tenancy continues to be held in connection with the periodic tenancy, section 213 applies in respect of the deposit that continues to be held in connection with the periodic tenancy, and any additional deposit held in connection with that tenancy, with the modifications set out in subsection (3).
(3) The modifications are that, instead of the things referred to in section 213(3) and (5) being required to be done within the time periods set out in section 213(3) and (6)(b), those things are required to be done—
(a) before the end of the period of 90 days beginning with the commencement date, or
(b) (if earlier) before the first day after the commencement date on which a court does any of the following in respect of the periodic tenancy—
(i) determines an application under section 214 or decides an appeal against a determination under that section;
(ii) makes a determination as to whether to make an order for possession in proceedings under section 21 of the Housing Act 1988 or decides an appeal against such a determination.
(4) If, on the commencement date—
(a) the periodic tenancy is no longer in existence, or
(b) no deposit continues to be held in connection with the periodic tenancy, the requirements of section 213(3), (5) and (6) are treated as if they had been complied with by the landlord in respect of any deposit that was held in connection with the periodic tenancy.
(5) In this section and sections 215B to 215D “the commencement date” means the date on which section (Tenancy deposits) of the Deregulation Act 2014 is fully in force in England and Wales.

215B Statutory periodic tenancies: deposit received on or after 6 April 2007
(1) This section applies where—
(a) on or after 6 April 2007, a tenancy deposit has been received by a landlord in connection with a fixed term shorthold tenancy,
(b) the requirements of section 213(3), (5) and (6) have been complied with by the landlord in respect of the deposit held in connection with the fixed term tenancy,
(c) a periodic shorthold tenancy is deemed to arise under section 5 of the Housing Act 1988 on the coming to an end of the fixed term tenancy, and
(d) when the periodic tenancy arises, the deposit paid in connection with the fixed term tenancy continues to be held—
(i) in connection with the periodic tenancy, and
(ii) in accordance with the same authorised scheme as when the requirements of section 213(3), (5) and (6) were last complied with in respect of it.
(2) The requirements of section 213(3), (5) and (6) are treated as if they had been complied with by the landlord in respect of the deposit held in connection with the periodic tenancy.

215C Renewed fixed term or contractual periodic tenancies: deposit received on or after 6 April 2007
(1) This section applies where—
(a) on or after 6 April 2007, a tenancy deposit has been received by a landlord in connection with a shorthold tenancy (“the original tenancy”),
(b) the requirements of section 213(5) and (6) have been complied with by the landlord in respect of the deposit held in connection with the original tenancy,
(c) a new fixed term or periodic shorthold tenancy (“the new tenancy”) comes into being on the coming to an end of the original tenancy or a tenancy that replaces the original tenancy,
(d) the new tenancy is not one that is deemed to arise under section 5 of the Housing Act 1988,
(e) the new tenancy replaces the original tenancy, and
(f) when the new tenancy comes into being, the deposit paid in connection with the original tenancy continues to be held—
(i) in connection with the new tenancy, and
(ii) in accordance with the same authorised scheme as when the requirements of section 213(5) and (6) were last complied with in respect of it.
(2) The requirements of section 213(5) and (6) are treated as if they had been complied with by the landlord in respect of the deposit held in connection with the new tenancy.
(3) The condition in subsection (1)(a) may be met in respect of a tenancy even if—
(a) it replaces an earlier tenancy, and
(b) the tenancy deposit was first received in connection with the earlier tenancy (either before or after 6 April 2007).
(4) For the purposes of this section, a tenancy replaces another tenancy if—
(a) the landlord and tenant under the later tenancy are the same as under the earlier tenancy, and
(b) the premises let under the later tenancy are the same or substantially the same as those let under the earlier tenancy.

215D Sections 215A to 215C: transitional provisions
(1) Sections 215A to 215C are treated as having had effect since 6 April 2007, subject to the following provisions of this section.
(2) Sections 215A to 215C do not have effect in relation to—
(a) a claim under section 214 of this Act or section 21 of the Housing Act 1988 in respect of a tenancy which is settled before the commencement date (whether or not proceedings in relation to the claim have been instituted), or
(b) proceedings under either of those sections in respect of a tenancy which have been finally determined before the commencement date.
(3) Subsection (5) applies in respect of a tenancy if—
(a) proceedings under section 214 in respect of the tenancy have been instituted before the commencement date but have not been settled or finally determined before that date, and
(b) because of section 215A(4), 215B(2) or section 215C(2), the court decides—
(i) not to make an order under section 214(4) in respect of the tenancy, or
(ii) to allow an appeal by the landlord against such an order.
(4) Subsection (5) also applies in respect of a tenancy if—
(a) proceedings for possession under section 21 of the Housing Act 1988 in respect of the tenancy have been instituted before the commencement date but have not been settled or finally determined before that date, and
(b) because of section 215A(4), 215B(2) or 215C(2), the court decides—
(i) to make an order for possession under that section in respect of the tenancy, or
(ii) to allow an appeal by the landlord against a refusal to make such an order.
(5) Where this subsection applies, the court must not order the tenant or any relevant person (as defined by section 213(10)) to pay the landlord’s costs, to the extent that the court reasonably considers those costs are attributable to the proceedings under section 214 or (as the case may be) section 21 of the Housing Act 1988.
(6) Proceedings have been “finally determined” for the purposes of this section if —
(a) they have been determined by a court, and
(b) there is no further right to appeal against the determination.
(7) There is no further right to appeal against a court determination if there is no right to appeal against the determination, or there is such a right but—
(a) the time limit for making an appeal has expired without an appeal being brought, or
(b) an appeal brought within that time limit has been withdrawn.”

Giles Peaker is a solicitor and partner in the Housing and Public Law team at Anthony Gold Solicitors in South London. You can find him on Linkedin and on Twitter. Known as NL round these parts.

22 Comments

  1. kjetilniki

    the amendment was tabled by Philip Davies
    who is a conservative backbench MP for Shipley.
    Is it a government amendment?
    altho frequently the government resists all attempts to amend their bills I (not invented here), on looking at the clause one feels the clause will be adopted. The only appropriate amendment to the new clause would be that the change not to have effect in respect of proceeding issued before the coming into force of the section.

    Reply
  2. kjetilniki

    I think it worth adding that the new clause adding the new sections to the localism act was added to the deregulation bill and the bill given a 3rd reading and passed the commons yesterday

    Reply
    • Giles Peaker

      I did say the Deregulation Bill – and it amends HA 2004 not the Localism Act. Thanks for the progress update – yes it was a very last minute amend.

      Reply
      • kjetilniki

        damn damn, memory , wrong statute
        you did give the info, I was just adding that it wasn’t just a NC but had been inserted into the bill

        Reply
  3. dbird

    S215A (1) refers to a fixed term tenancy (i.e. in the singular) followed by a periodic. Is this intended to also cover multiple fixed term tenancies (the first starting before Apl 2007 & the others after that date) with the last of them followed by a periodic?

    S 215C appears to cover this scenario but only for tenancies not arising under S 5 Housing Act 1988 & it does not allow time to protect the deposit (S 213(3) is not mentioned).

    Reply
    • Giles Peaker

      S 215C covers any ‘renewal’ tenancy – i.e a further fixed term tenancy, or contractual periodic (NOT statutory periodic by virtue of s.5), where the original tenancy started after April 2007.

      In the scenario you raise (first fixed term before April 2007, subsequent fixed term after April 2007) the deposit would absolutely have to have been protected at the commencement of the second fixed term. That will not be ‘excused’ by this amendment.

      Reply
      • dbird

        Thanks for your answers. First fixed term summer 2006 followed by 3 further fixed terms in summer 2007 (i.e. after Apl), 2008 & 2009. Then – in summer 2010 – becomes periodic which I believe is statutory but I’m not sure how a periodic becomes contractual rather than statutory – is it only if there is a provision in the tenancy agreement to that effect?

        If the periodic is statutory does this scenario come under 215A? If not, is it covered at all by the amendments? It would seem odd if it is not, as they are intended to “correct” the Superstrike decision.

        Reply
        • Giles Peaker

          No, as per my further reply below, it would be covered by s.215B. But only if the deposit had been protected after April 2007, which on the scenario you give, it most certainly should have been, specifically in summer 2007.

          If the deposit wasn’t protected in summer 2007 (or subsequently, by at least May 2012), this amendment won’t help because there has been a clear breach of the s.213 requirements.

    • Giles Peaker

      Or, if you mean first periodic pre April 2007, then second periodic after April 2007 – and deposit protected – then becomes statutory periodic, that would be covered by S 215B. It doesn’t say ‘first’ fixed term, but deposit received in relation to ‘a’ fixed term tenancy. Which would be the case.

      Reply
  4. William Noad

    In a situation where a deposit is protected and prescribed information given in compliance with the 2004 Act at the outset of a contractual term, it is being said that Superstrike should be interpreted as requiring that the prescribed information be re-served on the tenant following the commencement of a statutory protected tenancy. Section 213 (6) (b) provides for the information to be given ” within ” the period of 14 days beginning with the date on which the deposit is received. Is there room to argue that this means “before ” the end of the period? And if so, why should not the giving of the information at the outset of the contractual term be compliant? Any thoughts gratefully received.

    Reply
    • Giles Peaker

      You are looking at an old version of s.213. After the Localism Act amends the period is 30 days.

      The Superstrike point is that the PI must be re-served when the deposit is ‘received’ in respect of the statutory periodic, which is the point the stat periodic arises. So 30 days beginning from the start of the stat periodic. No prospect of arguing that the service of PI at the start of the contractual covers that.

      Reply
      • William Noad

        My point is that the legislation requires the prescribed information to be delivered to the tenant before a certain date – that date being calculated by reference to the commencement of the start of the periodic tenancy which follows on from the end of the contractual one. If that information has been provided (which never happened in Superstrike) before the commencement of the periodic tenancy that should (in any common sense world) be compliant. It seems to me that the law is not that the information has to be delivered between the start of the periodic tenancy and a certain date following its commencement but at a date which is not later than so many days after the tenancy comes into being. It should then follow that if the deposit was protected initially and the Prescribed Information given to the tenant – all has been done as it should have been. Any thoughts on this will be gratefully received.

        Reply
        • Giles Peaker

          You are missing the point that the deposit is ‘received’ in respect of the new tenancy when the statutory periodic arises, as per my last comment. So obligations triggered anew.

        • William Noad

          Does it therefore follow that the deposit (which is already protected and remains protected) must be re-protected? I think not.

        • Giles Peaker

          Yes, exactly that. But see Superstrike. If the deposit remains on protection for the new tenancy that counts as ‘re-protection’. Though most of the schemes have now changed their rules about this, to require notification of a stat periodic arising. Sorry William. you are stuffed on your argument, at least until the Deregulation Bill amendments come into force.

  5. Jacqui Allen

    Could someone please advise what the position is in this transitional period. I have just received a letter from a tenants solicitor claiming the deposit and 2 months rent because he says the deposit wasnt correctly protected and PI issued when it went periodic. Tenancy was AST for 6 months from 23/11/12 and the deposit has been protected by MyDeposits since 11/12/12 but was changed to periodic when they changed their systems in January 2014. The PI was issued at the outset by the Managing Agent but they didnt re-issue when it became periodic – well not until Jan 2014 anyway.
    If it makes any difference the tenant gave notice that they were moving out in April 2013 but then chnaged their mind about 4 days before they were due to move out. They have never formally retracted their notice, have refused to sign a new agreement ever since and also refuse any rent increase.
    I’d just like to know what “defence” can be used while waiting for the Deregulation Bill enactment

    Reply
    • Giles Peaker

      We can’t give advice on individual situations, I’m afraid. Besides, that is what we get paid for.

      But I would point out that the tenancy went statutory periodic on 23/05/12 and that has nothing to do with when MyDeposits changed their systems or not.

      Also, there is no ‘transitional period’ until the Bill is both enacted and in force.

      Reply
  6. db6279

    Has the deregulation bill been enacted yet? Is there anywhere you can keep up with the progress of the bill? And finally, is the commencement date the same as the enactment date?

    Reply
  7. Craig67

    A tennancy which was agreed in 2008 via AST. Not renewed so became Statutory Periodic in 2009 Docs not re-served.

    2014 New LL buys property gives deposit details within 30 days then issues a sec 21.

    Notice has lapsed and court date for eviction expected soon.
    1. Does sec 21 fail due to invorrect admin when ast lapsed ?
    2. Does fine apply to current LL or is it prior LL.?
    Assuming Deregulation bill has not become law has by the time of the court appearance .
    If the tenant / LL agree to new AST will that prejudice position for tenant if then LL issies sec 21?
    ( assume not relevant and no valid defence / fine if bill becomes law?).

    Reply
    • Giles Peaker

      If deposit was protected in 2008 and only issue is the prescribed info on change to stat periodic, then late service of the PI by new landlord would mean s.21 could be served.

      Fine applies to ‘the landlord’ – s.214 – so likely current landlord.

      Reply

Trackbacks/Pingbacks

  1. Residential tenancy deposits: third time lucky? - Falco Legal Training - […] explanation of these proposed changes than I can provide, I suggest you look at the article “Make do and…
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