New ruling could see thousands of landlords face legal action

Published: 19/06/2013

A new ruling regarding tenancy deposit protection from the Court of Appeal could provide tenants with an opportunity to seek legal action against their landlords.

When entering into a new tenancy the landlord must, by law, protect the tenant’s deposit by placing it into a government approved deposit protection scheme and supply the tenant with prescribed information within 30 days.

Until now, should the tenant then remain in the property on a periodic tenancy (a tenancy which runs from month-to-month), it has been widely assumed that a periodic tenancy was simply a continuation of the original fixed term and therefore the deposit was already protected.

However last week the Court of Appeal upheld the decision that a periodic tenancy is, in fact, a new tenancy and deposits must be re-protected by the landlord or letting agency.

GW LET Solicitor, Rob Denman, explains:

“This latest ruling is understandably of real concern to landlords who had previously believed they were following the correct legal procedures. As a result landlords will not have re-protected the original deposit nor re-supplied the tenant the prescribed information within the 30 day deadline and are therefore, potentially, highly vulnerable.

“To make matters worse, under the Limitation Act, tenants up to six years ago could make claims against the landlord.

“That said, it is essential landlords do not worry unnecessarily. It is possible that there will be a further appeal, this time to the Supreme Court, where we hope common sense will prevail.

“However it is highly advisable that landlords now begin to re-protect all deposits at the end of all fixed term tenancies as standard. As legal specialists in landlord law we can help anyone confused by this new legislation.”

The ruling comes as a result of the case of Superstrike Ltd vs. Marino Rodrigues.

Mr Rodrigues began his tenancy on 8 January 2007, paying a deposit of £606.66. A year later, under the Housing Act 1988, he became entitled to a periodic tenancy. As the periodic tenancy remained on the original terms, no new tenancy agreement was entered and the landlord retained the initial deposit.

On 22 June 2011 the landlord evicted the tenant, serving him a Section 21 Notice before being granted possession. However possession was then revoked on the grounds of ‘non-compliance with the rules on tenancy deposit protection’. Despite his subsequent appeal, the Court of Appeal ruled that a new tenancy had been created on 8 January 2008.

A full transcript is available here: http://www.bailii.org/ew/cases/EWCA/Civ/2013/669.html

Content correct at time of publication