I received this email to day regarding depostis from News at Core Property and it is so importnt to know about deposits and what to do.
A recent Court of Appeal ruling (Superstrike Ltd vs Rodrigues) may have potential ramifications for the private rental sector in the UK. This decision on tenancy deposit protection clarifies the position of deposits taken before the legislation came into effect in 2007.
In this case, the landlord of the property agreed an assured shorthold tenancy for one year less a day with the tenant to commence in January 2007. The deposit was paid by the tenant to the landlord under the terms of agreement at that time. Prior to 6th April 2007 the protection of deposits was not compulsory. There had been a voluntary code, but the deposit for this property was not protected and was just held by the landlord. After the fixed term of the tenancy ended it became a statutory periodic tenancy. In June 2011 the landlord served notice on the tenant which is where the issue in question arose.
The court had two questions to deal with:
Was there a new tenancy arising in January 2008 when the fixed term ended and the tenancy became a statutory periodic tenancy?
Did the new tenancy mean that the landlord must now protect the deposit?
It was argued that the commencement of the statutory periodic tenancy was a new tenancy and not, in fact, a continuation of the previous tenancy. The judge upheld that as it was clear from the 1988 Housing Act, the end of a fixed period tenancy is the creation of a new and distinct statutory tenancy rather than a continuation The tenancy from January 2008 should therefore have been treated as a new tenancy.
As the statutory periodic tenancy began after April 2007 it was argued that the deposit which had previously been received should have been protected within 14 days as per the legislation which had come into force. As this was not done the landlord had no legal basis upon which to serve notice and possession could not be granted.