According to Housing Act 2004 for assured short hold tenancies (ASTs) a landlord has to submit the paid deposit of tenant in some recognised tenancy deposit scheme (TDS).If a landlord has not followed the correct tenancy deposit procedure, he cannot obtain possession order under section 215 of Housing Act 2004.
In Superstrike
case on January 2007 the tenant entered into a 12 month fixed term tenancy
(AST). According to the terms of the tenancy, the tenant paid one month's
deposit. The landlord placed deposit in a tenancy scheme that has not yet come
into force. At the end of the 12-month fixed term, the tenant remained in
occupation and tenancy rolled into statutory periodic tenancy. Almost six
months later, the landlord served a section 21 notice for possession and to end
the periodic tenancy .on expiry of notice he obtained a possession order. The
tenant challenged this .he argued that the possession order is not justified as
the landlord had not protected the deposit as per the sanction in section 215 of
Housing Act 2004. The court of appeal held that as the fixed term had expired
and converted to a statutory periodic tenancy in January 2008. Hence the new
tenancy was formed on a date after the deposit protection regulations under Housing
Act 2004 had come into force. So the landlord was under an obligation to
protect the deposit from that date which he had not done so the statutory
regulations had been breached and the possession order overturned.
There can
be serious implications on landlord of the decisions like this. The
consequences of a court finding non-compliance mean that landlords may prevent
from obtaining possession orders and can be made subject to financial penalties
as well.
There may
be possibility that the law will be clarified by Parliament who has addressed
the issue in clause 31 of the Deregulation
Bill 2013-2014 ("the Deregulation Bill").
Meantime the
landlords should re-protect all deposits held with the TDS and shall re-serve
the Prescribed Information relating to these deposits on all of their tenants
whose tenancies have converted to statutory periodic tenancies.
The
content of this blog is intended to provide a general guide to the subject
matter. Specialist advice should be sought about your specific circumstances
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