Tenancy deposits – where we are now?

With the relevant parts of the Deregulation Act 2015 having come into force on 26 March 2015, time for a quick outline of what the changes mean for deposit protection and section 21 notices.

Deposit taken pre 6 April 2007 which became statutory periodic after April 2007.
Superstrike [our note] found that any pre 2007 deposit had to be protected if the tenancy became a statutory periodic after April 2007. This decision is shortly to be redundant.

For all pre-April 2007 tenancies which became statutory periodic after 6 April 2007, any deposit must be protected and prescribed information served by 23 June 2015. The deposit will then be treated as if it has always been protected (no retrospective claims). If they are not, then the usual s.214 and s.215 penalties for failure to protect will apply.

Deposits taken pre 6 April 2007 and tenancy became statutory periodic before 6 April 2007
The Court of Appeal, in Charalambous v Ng, [our note] had found that while deposits taken before 2007, where the tenancy had also become a statutory periodic before 6 April 2007, did not have to be protected, no s.21 notice could be served until the deposit was protected or returned.

The Deregulation Act makes no change to this. The deposit doesn’t have to be protected, but no s.21 notice can be served until it is either protected or returned. No penalty claims are possible.

Post 6 April 2007 tenancies
Where a deposit was taken, protected and the prescribed information served within the fixed term, this will be held to count for service of the prescribed information on any subsequent new tenancy (or statutory periodic) arising, so long as the deposit is with the same scheme.

There are a couple of points to note here.

This does mean that the Superstrike position on re-service of prescribed information on new tenancy or statutory periodic arising no longer applies.

But only if the deposit was protected and prescribed information served within the initial fixed term,

The original protection of deposit and service of prescribed info may have been late (after the 30 days). The Deregulation Act will still deem the prescribed information served for any subsequent ‘new’ tenancies (replacement or statutory periodic).

This will not prevent a penalty claim in respect of the original late protection and/or service of PI, as far as I can see, at any time. And even more oddly, it will still be impossible for a landlord to serve a s.21 notice if a deposit has been protected late – after the 30 days – before returning the deposit, unless the tenancy has since been renewed or become a statutory periodic, at which point the new s.215B will apply and the deposit and PI will be deemed to be compliant for the purposes of serving a s.21.

Any ongoing failure to protect and/or serve the prescribed information is wholly outside the provisions of the Deregulation Act. For these, Superstrike principles will continue to apply, so cases like Gardner v McClusker would still be possible.

Retrospective and transitional provisions
The new s.215A and s.215B are treated as having had effect from 6 April 2007, with some exceptions.

Any past possession claims, or penalty claims which have had a final order, and the time for any appeal has expired, cannot be re-opened even if the outcome would have been different had s.215A or s.215B been in force.

Any current s.21 possession claims or s.214 penalty claims, issued before 26 March 2015 will be determined on the basis of s.215A or s.215B. So what had been an invalid s.21 notice will become valid if those sections apply. What had been a valid s.214 penalty claim will be dismissed if the only basis for the penalty claim was the Superstrike failure to serve the prescribed information on a statutory periodic arising. However, the landlord will not be awarded the costs of the possession claim, or defending the s.214 claim (New s.215C(5) ).

In all other situations covered above, what had been a breach is now as if it never was, so there can be no claims for a past Superstrike failing.

As a last detail, the prescribed information requirements have been amended to allow for an agent’s details to be given where the agent is dealing with the deposit.

 

 

About Giles Peaker

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, and still is Nearly Legal on Google +.
Posted in Assured Shorthold tenancy, Deposits, Housing law - All.

63 Comments

  1. it will still be impossible for a landlord to serve a s.21 notice if a deposit has been protected late – after the 30 days – before returning the deposit, unless the tenancy has since been renewed or become a statutory periodic, at which point the new s.215B will apply and the deposit and PI will be deemed to be compliant for the purposes of serving a s.21.

    This should already have been the case before s.215B, as the wording was/is that no s.21 notice may be served in relation to a tenancy if the deposit wasn’t protected and PI given within 30 days of receipt: Especially since Superstrike, I think it is clear that this means that every time a new tenancy is created a landlord has 30 days to protect the deposit and be good to go whatever the situation was in relation to a previous tenancy.

    • No, this changes that position. It turns a previous ‘late’ protection during the fixed term into a compliant protection for a new tenancy with no further steps required (no re-protection, or further service of PI).

      That said, I agree on your interpretation of the previous wording.

    • As long as the deposit was correctly protected within 30 days of the new tenancy then s.21 notice was possible.
      That covered late or even non protection during the previous tenancy.

    • Yes. But now late protection during fixed term means deemed compliant for new tenancy with no need to re-protect or further service of PI.

    • There was no need to re-protect unless the scheme required it.

      My point is simply that s.215B does not create a new way out if the deposit was protected late (though it might indeed reduce the overhead since there is no need to re-serve the PI).
      It was already the case that a late protection became compliant when a new tenancy was created, as long as the deposit remained protected.

    • We may be at cross purposes. I’m agreeing with you, but pointing out the substantive change in requirements. And it is odd to provide for a failure comply in one tenancy (due to not meeting time limits) to become automatically complaint for the next tenancy with no further steps of any kind required. But there we are.

  2. I wondered post Superstrike whether the fact that the protection requirements applied distinctly to each ‘new’ tenancy might mean that a landlord who took a deposit for an initial fixed term, and retained it for consecutive fixed terms/a statutory periodic tenancy without ever protecting it could face multiple claims against him.

    I thought that the Deregulation Act cleared this up .. on the basis that if the landlord HAD protected the deposit and served PI in the initial fixed term, they wouldn’t be in breach for further terms, so one claim would seem applicable for the intiial fixed term only on the basis that the landlord’s obligations could have been met in full through protection at that stage.

    But now I’m wondering about it again… as you say, if there has been no protection in the fixed term, then s.215B does not apply, and there is no provision for this in the Derregulation Act. I suppose also that a landlord would be in breach of their obligations still where a deposit had been protected in an insurance based scheme during the fixed term, but this had lapsed at some point duirng a subsequent tenancy.

    • I think a complete failure to protect would still be a repeated breach for each new tenancy. The Dereg Act amends do not help someone who has failed to comply, save only for the ‘late protection during fixed term’ bit at s.215B.

      Likewise the deposit becoming unprotected during a subsequent tenancy. Nothing in the Dereg Act amends make any difference to that.

  3. Pingback: Deregulation Act and Tenancy Deposits: Is it really so simple now? | Lettingmate

  4. I am an agent and looking for info on how this act effects my business but No one seems to be mentioning the bit about section 21 notices ‘expiring’ in their use 6 months after service……

    IT IS MENTIONED IN 2 SECTIONS

    “(4B)A notice under subsection (1) or (4) may not be given in relation to an assured shorthold tenancy of a dwelling-house in England—

    (a)in the case of a tenancy which is not a replacement tenancy, within the period of four months beginning with the day on which the tenancy began, and

    (b)in the case of a replacement tenancy, within the period of four months beginning with the day on which the original tenancy began.

    and then in the another it says

    (4E)Where—

    (a)a notice under subsection (4) has been given in relation to a dwelling-house in England, and

    (b)paragraph (b) of that subsection requires the date specified in the notice to be more than two months after the date the notice was given,

    proceedings for an order for possession under this section may not be begun after the end of the period of four months beginning with the date specified in the notice.”

    SO ……

    In short are we pretty much saying that a notice cannot be used in accelerated possession proceedings 6 months after it was served????

    Hopefully you can confirm if this is correct!

    • Claire – this is a whole separate issue to tenancy deposits, so we were going to deal with it separately.

      The s.21 provisions will not be in force until probably October 2015. They will then apply to all new tenancies (not replacement tenancies), starting on or after the commencement date (then all tenancies after 3 years).

      You have the wrong section for the ‘expiry’ of s.21 notices. That is what will be the new HA 1988 s.21(4D)

      (4D)Subject to subsection (4E), proceedings for an order for possession under this section in relation to a dwelling-house in England may not be begun after the end of the period of six months beginning with the date on which the notice was given under subsection (1) or (4).

      (4B) will mean that no notice can be given within the first 4 months of an original fixed term tenancy.
      (4E) means that when a notice has been served, proceedings must be started within 4 months of the expiry of the notice.

      So, yes, for all new tenancies after the commencement date (and then all tenancies after 3 years), there will be a 6 month window from the date of service of a section 21 to commence proceedings. Otherwise a new s.21 must be served.

  5. hi i am a tenant currently disputing a deposit with the dps i noticed the agents have not changed any info for me even though ive had approx 4 new tenancies since the deposit was placed and my ex partner is still on it and he left 2 yrs ago! also i never received any prescribed information with any of the tenancies i have signed with the agents from 2012 to current. is this against the law? thanks for your help in advance

  6. I fear I may be embarrassed after asking this but anyway.

    I made a note to myself to come back to this article because of the italicised notes under the heading “Post 6 April 2007 tenancies” – where the deposit must be protected and PI given ‘within the fixed term’.

    My note was to consider the position of a post 2007 verbal periodic tenancy initially where deposit protected and PI given within 30 days and then a new written tenancy given with no PI and was that okay?

    Clearly if the deposit and PI must be done ‘within the fixed term’ the answer is no – it needs doing again with the new written tenancy.

    However, upon reading section 215B which deals with post 2007 deposits I can’t see any requirement to have done the initial requirements and PI within the fixed term.

    The references are that it be done correctly during the ‘original tenancy’ and then they are treated as being complied with in their application to the ‘new tenancy’.

    The fixed term part as I see it is only 215A which deals with pre 2007 deposits (and needs to say fixed term so triggers the section 5 requirement).

    Have I missed something obvious here and going to be very embarrassed now?

    • Ah, but don’t the ‘initial requirements’ of all the schemes require a written tenancy agreement? So in your scenario, the landlord could not be compliant in the ‘oral periodic’ period at all.

      But the general point is right, I think. S215B does not require an initial fixed term, but an initial tenancy. So, say, a (written) monthly periodic, later turned into a new fixed term tenancy would fall under S215B if deposit protected etc at any point during the life of the periodic tenancy. With the usual provisos about still facing the penalty for late protection.

  7. It hurts my brain a bit but I think this means that the 30 day time limit no longer applies albeit for the penalty claims! is that right?

    • No… ;-) It is only in specific situation of renewal tenancy and/or statutory periodic. So a s.21 served during first tenancy before protection and PI would still be invalid.

  8. Hi

    Thanks for the article Giles, I don’t know why I’m still going round in circles with this!

    So if a deposit was protected later than 30 days (therefore not compliant with the scheme rules), the tenancy then moves to a stat periodic tenancy, can LL during the periodic tenancy serve a valid S21 or does he/she need to return the deposit first?

    Thanks :)

    • Post Deregulation Act, they can serve a s.21 during the stat periodic if the deposit was protected (and PI served) during the term of the ‘initial tenancy’ – even if it was protected late. There will still be a potential claim for the late protection penalty, but the s.21 would be valid.

      If no protection during fixed term, then late protection during stat periodic, no s.21 can be served.

  9. Hi,

    Sorry another question on this, if the complete PI wasn’t served can a S21 be deemed valid when served? Or again should there be a return of deposit and service of completed PI then valid S21 served?

    • PI needs to be complete.

      Late service of complete PI enables s.21 to be served subsequently. No need to return deposit if deposit was protected within the 30 days.

  10. Thanks Giles, It wasn’t within 30 days , so in essence and just so I’m completely clear, protection was later than 30 days but within fixed term , PI never served completely = Return of deposit and servie of full PI before a valid S21 can be served. Last question I promise!

    • No…

      I think it will be either return of deposit or service of PI depending on the exact situation. If after (late) protection, there was a subsequent tenancy, or the tenancy became statutory periodic, and deposit still protected, it will be service of PI. If still in original term, will be return of the deposit.

      But this appears to be looking for advice on a specific case, so no more.

  11. Where does the Deregulation Act 2015 leave penalty claims for late deposit and/or late service of prescribed information taking place during the course of fixed term tenancies that began post April 2007 (where then applicable deadlines were: i. 14 days and ii. 30 days) assuming that they have legally come to an end (by virtue of their becoming statutory periodic), and for the statutory periodic tenancies that follow on, do these shortcomings require a landlord to rectify by re-deposit and/or re-service?

  12. What, so under the Deregulation Act an original late protection of a deposit and/or late service of PI (in a fixed term), would still be liable for a penalty, but no no additional penalty liability would arise in respect of any ‘follow-on’ renewal/statutory periodic term if done, albeit late/flawed in the fixed term (and also no re-protection of a deposit and re-service of the PI required)?

    • Got it (almost) but for a fixed term (ended and/or renewed or become periodic) under old 14 day rules, liable for penalty if deposit not protected and/or PI not served within 14 days, or only if not served within 30 days?

    • 14 days. But then subject to previous regs and Tiensia (http://nearlylegal.co.uk/2010/11/tenancy-deposit-protection-eviscerated/) so if subsequently protected & PI served within the first term, a claim likely to fail. (Unless it was caught by the ‘protect by 6 May 2012 or else’ provision in Localism Act and that deadline was missed).

      Also – just caught your ‘late/flawed’ in fixed term. The Deregulation Act covers compliance in fixed term/initial tenancy, but NOT flawed compliance. Flawed compliance is not enough. So a failure to fully comply in fixed term/initial tenancy will mean penalty on first failure and on each subsequent failure/tenancy.

  13. I have situation where a relative fell behind with rent approx £1500 in around 2013 and was issued with a section 21 in 2014 after going more than 2 months behind with rent. This person has been in their flat since 2001 and a deposit was taken. New tenancy agreements have been signed since 2001 and and the last one being 2012. At no point on any of the contracts was there a mention of the deposit being protected in any scheme. A payment plan was agreed after the section 21 was issued in 2014 and agreed to by both parties however the relative was inconsistent in their payment plan to get the debt down. Fast forward to July 2015 and an ultimatum was given whereby if full payment was not received at the end of that month then legal proceedings will begin. A large chunk of it was paid off and another payment plan put to them but an “Accelerated Possession Order” was still initiated. May I ask if the original section 21 is invalid due to the deposit not being in a deposit scheme, that he knows of, thus making the “accelerated possession order” invalid and is their room for a counter claim if the tenant wishes to do so? The tenant had and has every intention to pay off the rent owed – they just got into some financial difficulties and has been a good tenant since 2001. Thanks in advance

    • Your relative needs proper advice. But in principle, if there was a deposit and new tenancy agreements were entered into as recently as 2012 and the deposit wasn’t protected (easy to check) and/or the prescribed information not served, then a s.21 would be invalid and there may be a deposit penalty claim.

      But this really, really needs checking and confirming by an advisor. And it would have to be proved that there was a deposit. The fact that the tenancy agreements were silent about a deposit means nothing by itself.

  14. Thank you for your quick reply.

    Just discovered that the assured shorthold tenancy agreements up until 2011 said “deposit” on the contract and since 2011 it now says “Final Rent”. The contracts that are pre-20011 have a page inside the contract stating the deposit will be placed with TDS and notification of this will be given within 14 days. Received nothing he was aware of.

    Contracts since 2011 don’t state “deposit” but instead where the the deposit amount is written it says “Final Rent” next to it. Inside or attached there is nothing mentioning deposit being with a scheme etc. Has he in some way by signing this agreement, with no mention of a deposit but instead “Final Rent”, agreed he has no deposit but it can be used to pay the final periods of his tenancy? (Confused what this means).

    So we don’t know how to check if deposit is with TDS as all we can enter is amount and date of the past contracts pre-2011.(Have no ID of course).

    Thanks in advance!

    • Peter – get advice! We can’t advise on individual cases, certainly not at that level of detail without seeing the documents (and don’t send them, because we couldn’t advise anyway. We aren’t insured to do so).

      You can check deposit by postcode on the Scheme’s site.

  15. Hi, I think my situation is like Carrie above. As a tenant I initially had a fixed term rental contract in August 2013, and 4 others since then (all with s21 notices for the end of each term) until Aug 2015. Deposit was protected with DPS properly for 1st rental contract, but it doesn’t seem as this was renewed for the following terms.

    I’m confused because your article suggests that since deregulation this is ok, but your answer to Carrie suggests it is illegal. Can you clarify please?

    • Your situation is not like Carrie’s.

      Unless your deposit was not protected (and the prescribed information served) within 30 days of receipt for the initial tenancy, and remained and remains protected, the Deregulation Act provisions now apply. if it wasn’t, then they don’t, as set out in the post.

      Carrie’s case had a fundamental change in tenancy conditions. Joint to Sole. And no prescribed information.

      Please re-read the post.

  16. Hi Giles,

    Thanks for your blog. It has answered many questions I had about the deposit protection scheme. There is one case that is not discussed very often (unless I missed it – apologies).

    Taking into consideration the Deregulation Act, what should the maximum penalty a tenant should request from a judge for a deposit that was NOT protected within the fixed term of the contract? The LL partially complied with the deposit protection scheme after the statutory periodic tenancy already started. I said partially because the landlord did not provide prescribed information. I come across many landlords who believe that not providing the PI cover them.

    Does it mean that the tenant can request 1-6 times (1-3 for failure to protect the deposit within the fixed term AND 1-3 for failure to provide the PI when the deposit was protected in the statutory periodic tenancy)?

    To keep it simple, I’ll assume that there was no new contract signed either.

  17. Thanks Giles.

    Most people I have spoken to have disagreed with me. They have said that it will be hard to prove the 2 breaches and that tenants are better off only reporting 1 breach to avoid their case being thrown out of court. What are your thoughts on those situations? Can a judge dismiss the whole case or could they reward a penalty for 1 breach even if they disagree on the other breach?

  18. Hi Giles,

    In a Assured Shorthold Tenancy agreement, if the landlord fails to protect the deposit within 30 days but protect it shortly after let’s say 32 days after receiving the deposit, can he be sued for late deposit protection? Will he be fined with a month-deposit fee?

    Thanks for your thoughts on it!
    Kind regards,
    Chris

    • Thanks for your quick reply!
      In this situation what happens to the fees that the tenant has to pay should he decides to go to court? Can he expect them to be due from the landlord after the trial?

      Kind regards,
      Chris

  19. If a deposit was taken post Apr 2007 and prescribed information was not served within 14 days does the deregulation act prevent a penalty claim

  20. Hi Giles,

    If a deposit of £1000 is paid but only £900 is protected in a scheme, what rights does the tenant have? Will a court claim ‘minimum fine’ be 1*100 or will it be a multiple of the entire deposit?

    Many Thanks.

  21. Hi Giles,

    What about my case. I’ve signed new tenancy agreement in November 2007 and after 6 months it became periodic. My deposit was not secured and no PI was served. In 2010 my agent went in to liquidation and new agent is managing my flat since then. They paid my deposit in to custodial scheme and serve PI beginning of June 2015. Can they serve s21 to me? What can I do with it?

  22. Hi Giles,
    Am an agent picking up a mess from another agent who left…. Tenant moved in May 2009, no protection but on TA it states deposit held with DPS. Tenancy renewed each year – so 8 in total. Deposit finally protected late in 7th tenancy with a different scheme, but no prescribed information given, wrong certificate given. Landlord died in 7th tenancy, but wife inherited. Would the tenant be able to claim for all the years we breached thus also not allowing us to serve a S21?

    Thanks in advance,

    Dean

    • Bluntly, probably yes. Certainly no s.21 until deposit returned to tenant. Definitely a potential claim by tenant (a separate thing) and depending on the nature of the change of agents and the nature of inheriting, probably for any tenancies granted in at least the last 6 years – limitation would probably apply on a claim for anything arising longer than 6 years ago.

  23. If a deposit is paid to the outgoing tenant, rather than the landlord (though outgoing tenant paid original deposit to landlord), and deposit isn’t protected – where does that leave the new tenant if there are any issues with the deposit?

    • I’m assuming that this is a joint tenancy. If so, unless there is a new tenancy for all the joint tenants, the ‘new tenant’ is effectively the sub-tenant of the existing (and previous) joint tenants – a lodger, in effect. So the ‘new tenant’ is not in a position to take any steps about the deposit.

      But it all depends on the exact situation. So I’d suggest getting proper advice ASAP.

  24. Hi Giles, what would happen where the landlord protects the tenancy however at the end of contract the tenants stay another month with a new contract Of 31 days. However the deposit is released at the end of the first tenancy and the deposit is not protected for the second. Thanks!

  25. Thanks Giles. the protection scheme sent an email at the end of the first tenancy to the LL and T that the deposit had been released to the LL and the scheme was now closed as she hadn’t made it periodic. The LL is now being unreasonable with her proposed deductions.

    • Released to the landlord? Unless the landlord informed them the tenancy was ended this makes little sense to me (in fact, not even then). I don’t think any of the schemes require notification of a tenancy going periodic. But if that was what happened, I suppose an arguable failure to protect for the second period. But you should get proper advice, from someone who has seen the documents.

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