A decision made in Wandsworth County Court on 14 June 2013 has caused recent consternation among landlords and letting agents as the impact it may have on the private rental sector became apparent.
The tenant took on an assured shorthold tenancy for one year on 8 January 2007, at a monthly rent of £606.66, and paid one month’s rent deposit in advance. On 7 January 2008 the fixed term expired and the tenancy became a statutory periodic tenancy.
On 22 April 2011 the tenant’s landlord applied for possession under a Section 21 notice. An order was granted on 8 May 2012 but was set aside on 26 June 2012 on the grounds that the landlord had not complied with the tenancy deposit protection regulation that came into effect on 6 April 2007 – after the commencement of the fixed term tenancy, but before the onset of the statutory periodic tenancy.
A hearing was held on 20 May 2013, and last Friday the court made its decision: that a statutory periodic tenancy is a new tenancy, conflicting with the heretofore widely held belief that it is simply a continuation of a fixed term tenancy. As such, the court decided, the deposit should have been protected “no later than the end of January 2008”. The landlord was therefore not entitled to regain possession using a Section 21 notice and the appeal was upheld.
This has led to a great deal of confusion regarding how deposits should be treated at the onset of a periodic tenancy, and has potentially left many landlords open to legal action from tenants evicted – potentially unlawfully – using Section 21 notices after the expiry of a fixed term tenancy.
Lawyers are currently studying the potential implications of the ruling, and the three main deposit protection providers are examining their own terms and conditions. On 17 June, in response to the verdict, MyDeposits, the Deposit Protection Service and the Tenancy Deposit Scheme released the following joint statement:
"We have read with interest the latest judgment from the Court of Appeal on deposit protection.
Whilst landlords and lettings agents should take their own legal advice we will be considering the implications of this judgment for deposit protection and the service of the Prescribed information.
We will also consult the Department for Communities and Local Government (DCLG) on this and we will be issuing a further joint statement when we have fully considered the matter."
We will of course be following this story closely, and will endeavour to keep you abreast of any updates as soon as they occur.
Follow this link to read the case report in full: http://www.bailii.org/ew/cases/EWCA/Civ/2013/669.html
A further statement was issued by the National Landlords Association on 20 June 2013 which adds more clarity to the issue. You can read the statement by following this link: https://nlauk.wordpress.com/2013/06/20/superstrike-ltd-vs-marino-rodrigues-a-call-for-calm-and-greater-clarity/