Tenancy Deposits - where are we now and why is 24 June 2015 important?

Deposits paid under Assured Shorthold Tenancies have been the source of many sleepless nights by landlords who were reeling after the full implications of the decision in Superstrike Ltd v Rodrigues [2013] EWCA Civ 669 percolated through the residential housing system, to yield a brew of concern and confusion. If that was not enough, the decision in Charalambous v Ng [2014] EWCA Civ 1604 added extra strength to that concern, by ruling that deposits received by landlords not only long before the deposit regulations came into force, but also after the fixed term had ended, also needed to be registered, at a time when the date for doing so had long expired.

The major impact of these decisions was that, if a deposit received prior to 2007 had not been registered by 6 May 2012, not only did this expose non-compliant landlords to penalty claims by tenants, it also prevented the service of a valid notice of termination under section 21 Housing Act 1988, unless the deposit was first returned to the tenant.

Rescue has now come in the form of substantial amendments to the Housing Act 2004, brought in by the Deregulation Act 2015 with effect from 27 March 2015. So how do these amendments, the second set of legislative changes to the beleaguered Housing Act 2004 in the last 3 years, affect the position?

One of the most sweeping changes is that it reverses the decision in Charalambous. Landlords who have received a deposit prior to 6 April 2007 now have a fresh window of opportunity to register that deposit. That window runs from 27 March 2015 and ends on 24 June 2015, a total of 90 days. That is something that landlords, with pre 2007 deposits, really should take note of, as these opportunities are rare. Register a pre 2007 deposit within this time limit, and a section 21 notice can be validly served upon the tenant. Indeed, the legislation suggests that an existing section 21 notice, that would have fallen foul of the Charalambous decision, will be retrospectively validated.

Another encouraging change for landlords is that, in relation to pre 2007 deposits, whether or not a landlord registers that deposit by 24 June 2015, there is now immunity from the feared penalty provisions for default. Some will observe that the remedying of this perceived injustice was long overdue, mindful that the Court of Appeal decisions resulted in the requirement to register deposits when it was by then impossible to do so. Another welcome and sensible change to the Housing Act 2004 removes the Superstrike uncertainty about whether a deposit needs to be re-registered upon the fixed term ending and a statutory periodic tenancy beginning. If ever there was any doubt about that, it is now clear that the deposit does not need to be re-registered, and the statutory information about the deposit does not have to be reserved upon the tenant.

It may be that further issues of interpretation will arise, but it does appear that the most recent changes iron out many of the issues that the Court of Appeal highlighted in the course of a number of cases about deposits.

Published May 2015. Written by Peter Byfield (Partner - Property Dispute Resolution) at wannops llp

Peter is a member of the Property Litigation Association, sits as a Deputy District Judge and acted for the landlord in the Superstrike case.

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