The deposit protection system has recently been put into a state of flux by the recent ruling of the Court of Appeal. The judges held that when a fixed term assured tenancy comes to an end but the tenant remains in occupation under a statutory periodic tenancy, the landlord must go through the process of protecting the deposit again. This is because in the Court’s view a new tenancy has come into existence.
Landlord insurance clients will be familiar with the rules about protecting deposits but it will come as very unwelcome news that you will have to go through the whole process again if a tenant stays on under a statutory periodic tenancy. Some commentators are saying that landlords will have to issue a new tenancy deposit protection certificate and the “prescribed information” within thirty days each time a new statutory periodic tenancy commences when a tenant remains in occupation at the end of an assured shorthold.
The consequences of failing to follow the rules about tenancy deposit protection are very severe. Landlords face financial penalties and may find they cannot gain possession of the property if they have not complied with the proper procedures. This makes it so unfortunate that the law is now unclear. The best advice we can give our clients is to follow this story as it develops and to keep in touch with their deposit protection providers and agents. There is plenty of comment on the web; just search for the Court of Appeal case of Superstrike Ltd v. Rodrigues. Apparently, the deposit protection organisations are getting together to consider how landlords should react so guidance should be forthcoming.
There are several deposit protection facilities available to buy to let landlords. One of the largest is Tenancy Deposit Scheme (TDS). Their website says that they are involved in active discussions with the Department for Communities and Local Government and with three other protection schemes. A similar message appears on the website of DPS (The Deposit Protection Service). Landlords need to keep this issue under careful review.
Please keep in touch with this blog for further updates about this.