Last week the Deregulation Bill, containing important changes for landlords, was signed into law. One of the key components clarifies the deposit protection legislation around deposits taken before April 6th 2007. This article looks to summarise the relevant information for landlords and letting agents.
As members of the RLA know full well, protecting deposits is one of the key stages in renting a property. Hopefully information from the Deregulation Bill will clear up any discrepancies from previous concerns. Please do not hesitate to contact the RLA should you have further queries or concerns.
The RLA’s Policy Director, Richard Jones, wrote amendments to the Superstrike Court of Appeal case which were eventually accepted by Government after Philip Davies, MP, tabled the proposals. You can find out more here – Superstrike: RLA Amendments
The fallout of the case has taken nearly two years to be resolved, but with the Deregulation Act, landlords finally have some clarity on this. You can view a timeline of the changes to the Deregulation Bill on the Government webpage for the Deregulation Bill 2015. There are three areas of significant change.
- Under Section 32 – Tenancy Deposits – landlords that took a deposit before 6th April 2007 for tenancies that have (i) rolled into a statutory periodic tenancy and (ii) is still in existence have until 23rd June to protect tenants’ deposits and serve information or face fines.
- If these tenancies are renewed or continue ‘rolling over’ and a deposit has been protected the landlord/agent will not have to re-serve information – so long as the deposit is protected in the same Government approved scheme.
The important note here is the fact that the tenancy has been renewed. Irrespective of the tenancy beginning before deposit legislation came into force in April 2007 if the tenancy was renewed afterwards, the deposit needs to be protected (in an approved Government scheme) and information of the scheme must be served to tenants. Once this is done, it is not required every time the tenancy is renewed.
Crucially, for landlords there is now a window of opportunity, until 23rd June 2015, where they can protect these “Superstrike” deposits, restore their Section 21 rights and avoid any potential penalties for failing to protect the deposit.
- Section 30 – Tenancy Deposits, non-compliance with requirements – makes it clear that reference to ‘the landlord’ in the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 can be read as either landlord or letting agent wherever relevant.
- Section 31 – Tenancy Deposits: non-compliance with requirements. The Deregulation Bill puts the Court of appeal case of ‘Charalambous v Ng’ into statute.
- Therefore if a landlord had taken a deposit for a tenancy beginning before 6th April 2007, that exists as it was then – i.e., without a renewal or moving to a statutory periodic (rolling) contract – the landlord will not face fines for not protecting the deposit.
- HOWEVER, the landlord/letting agent will not be able to gain possession of the property through a Section 21 Notice until the deposit is either protected in one of the government approved schemes or returned to the tenant.
As a brief note, reference to ‘Superstrike’ refers to a Court of Appeal case ‘Superstrike vs Rodrigues’ where a landlord had not protected a deposit on a tenancy, even though the tenancy began before deposit protection legislation was enacted (6th April 2007). The main issue was that the landlord was relying on a Section 21 grounds for repossession.
- For more details read about the case: “Court of Appeal decision affects tenancy deposits”
- Superstrike: RLA Amendments