Nearly Legal: Housing Law News and Comment

Making sense of deposits. Nearly.

It started as such a simple idea, the tenancy deposit regulations. But bad drafting and some ‘interesting’ interpretations by the Courts put paid to that. We now have a confusing mess, for both landlords and tenants.

So, in a spirit of helpfulness (and to stop people asking me All The Time), here is the NL guide to where we are now (as of 24 August 2015) on deposits – what should have been done, what happens if it wasn’t done – depending on when it wasn’t done, and what can and can’t be done about it. Penalties, section 21 notices and all.

Deposit taken before April 2007 and tenancy became statutory periodic before April 2007

No penalty claim – deposit doesn’t have to be protected. But…

Charalambous v Ng – and s.31 Deregulation Act 2015 amending s.215 Housing Act 2004 – no Section 21 Notice can be served until the deposit is protected and Prescribed Information (PI) served, or deposit returned.

Deposit taken before April 2007 and tenancy became statutory periodic after 6 April 2007

A former Superstrike situation. Deregulation Act required deposit to be protected and PI served by 23 June 2015. If it was so protected, now treated as always protected.

If not protected and PI served by 23 June 2015, then no s.21 can be served until the deposit has been returned and there is a penalty claim by tenant.

For a tenancy which was renewed after 6 April 2007, even if the first tenancy began and the deposit was taken before April 2007, the deposit should have been protected and PI served at the renewal tenancy. Then it will be treated as being a deposit taken after 6 April 2007, as below (s.215B(3) Housing Act 2004 as inserted by Deregulation Act)

Deposit taken after 6 April 2007 and protected and PI served during ‘original’ tenancy (even if outside required period)

After Deregulation Act and new s.215B Housing Act 2004, this counts as service of PI on any subsequent tenancy of the same property if the deposit is protected in the same scheme.

But now it gets complicated. When was the deposit protected and PI served?

Between 6 April 2007 and 6 April 2012 – 14 day requirement for protection and service of PI.

But if deposit protected late but inside term of original tenancy, there is no effect on validity of a s.21 notice and no penalty claim (as Tiensia applies even on original breach, meaning late protection is good protection).

If deposit not protected and PI served within original tenancy term, a s.21 notice can’t be served until the deposit is returned (or PI served, if the deposit was protected but PI defective or not served). Penalty claim applies, so long as tenancy still exists, (Hashemi will apply.)

However – and this is my reading of s.215B(3), and is not certain – if the deposit was protected and PI served within 14 days of a renewal tenancy, that will count as an ‘original tenancy’ for any subsequent ones, so that the Deregulation Act ‘deemed compliance’ will mean no need to serve the PI again on subsequent tenancies. There would still be a claim on the first breach, so long as the tenancy exists (Hashemi will apply.)

If that is right, then it is also arguable that late protection and service of PI within the term of the ‘renewal tenancy’ will be deemed compliance for subsequent tenancies as an ‘original tenancy’.

After 6 April 2012 – 30 day requirement for protection and service of PI.

If deposit protected and PI served outside 30 days, no s.21 notice may be served during the initial tenancy unless deposit returned (or PI served, if that deposit was protected in time, but defective/no PI served in time). Penalty claim possible.

But if protected/served late but within original tenancy term, and the tenancy has subsequently been renewed or become a statutory periodic, a s.21 notice can be served. However, penalty claim on original default (only the original default).

If deposit not protected and PI served within original tenancy term, a s.21 notice can’t be served until the deposit is returned (or PI served, if the deposit was protected but PI defective or not served). Penalty claim applies on first and any subsequent breaches (on new tenancy/statutory periodic)

However – and this is my reading of s.215B(3) again – if the deposit was protected and PI served within 30 days of a renewal tenancy/statutory periodic, that will count as an ‘original tenancy’ for any subsequent ones, so that the Deregulation Act ‘deemed compliance’ will mean no need to serve the PI again on subsequent tenancies. There will still be a penalty claim for the first breach.

If that is right, then it is also arguable that late protection and service of PI within the term of the ‘renewal tenancy’ will be deemed compliance for subsequent tenancies as an ‘original tenancy’. Though in this case, there would be a deposit claim for each failure to protect in time.

If deposit protected and PI served within 30 days, no need to serve PI again on renewal tenancy/statutory periodic tenancy and no penalty claim. S.21 notice valid.

 

And, of course, for any post April 2007 deposit

If still not protected and/or no PI served at all, no s.21 notice and a penalty claim on each breach – for first tenancy and on any subsequent renewal/statutory periodic tenancy. Deposit must be returned (or PI served if deposit protected but PI defective/not served) to enable s.21 notice.

I trust that is all perfectly clear…

Exit mobile version