Landlords Face New Tenancy Deposit Scheme Pitfall27th Jan 2015
Landlords with tenancies that were granted before April 2007 could be unwittingly breaching Tenancy Deposit Scheme rules following a recent decision in the Court of Appeal, warn Coles Miller Solicitors.
Residential landlords who think the scheme does not apply to them because the fixed term of the tenancy has expired before April 2007 could be in for an unpleasant surprise.
The Court of Appeal has ruled that an implied statutory periodic tenancy can be covered by the rules - even if the written tenancy agreement ended before the Tenancy Deposit Scheme started on April 6 2007.
The court’s ruling in the case of Charalambous v Ng means that landlords who failed to protect the deposit taken prior to April 2007 will not be able to serve a valid Section 21 eviction notice on the tenants unless they return the deposit in full.
This is because once the fixed term comes to an end and the tenants remain in the property after April 2007, an implied statutory periodic tenancy arises.
That periodic tenancy is therefore covered by the deposit scheme regulations - meaning that the landlord must protect the deposit and provide the tenants with the prescribed information.
In the case of Charalambous v Ng, the landlord granted a tenancy and took a deposit in 2002, around five years before the Tenancy Deposit Scheme began.
The tenancy was renewed twice and expired in 2005 (around 18 months before the Tenancy Deposit Scheme rules came into force) but the tenants continued to occupy the property.
In 2012 the landlord tried to evict the tenants by serving a Section 21 notice.
The Court of Appeal has now ruled that the eviction notice was invalid as the landlord did not comply with the Tenancy Deposit Scheme.
This is because there was an implied statutory tenancy that came into existence after the April 2007 rules. It triggered the obligations under the deposit scheme so the landlord should have protected the deposit.
Coles Miller Litigation Solicitor Agnieszka Bania said: “The landlords should ensure that any deposit taken by them from the tenants, no matter when it was taken, should be protected under one of the deposit schemes.
“It is also paramount that all of the prescribed information set out in Section 2 of the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 is served on the tenants. The rules have recently become stricter - insufficient information may also invalidate Section 21 notices,” added Ms Bania, a member of the firm’s team of litigation solicitors.
Coles Miller has four offices in Poole, Bournemouth, Broadstone and Wimborne. The firm has 14 Partners and around 120 staff.
For more details, contact Coles Miller Litigation Solicitor Agnieszka Bania, 01202 355695.