Many individuals have purchased second properties as investments as a result of which there are now a significant number of private landlords in England and Wales. The vast majority of private landlords will be fully aware of the requirement to place the tenant's dilapidations deposit in a tenancy deposit protection scheme. However in a recent case the landlord fell foul of these provisions.
The tenants in question took a tenancy of a property in August 2002 for a term of one year. Under the terms of their tenancy they paid a deposit of £1,560. The tenancy was renewed in August 2003 and again in August 2004. Under the subsequent tenancies, the same deposit was payable although no further money actually changed hands. Unsurprisingly the original deposit was carried over and credited against the renewed tenancy. The final tenancy came to an end on 17th August 2005 but the tenants stayed in occupation of the property; again a very common occurrence in such a situation. In this event a 'statutory periodic tenancy' arose under the Housing Act 1988. On 17th August 2012 the landlord served a notice under the Housing Act 1988 ('a Section 21 Notice') by which he required possession of the property to be given after 17th August 2012.
Since 6th April 2007 all deposits taken by landlords (and letting agents) for the most common type of residential tenancy in England and Wales (known as an assured shorthold tenancy) must be protected by a tenancy deposit scheme. As the tenancy in this particular case arose prior to that date, the deposit had never been held under such a scheme.
If a tenancy deposit has been paid, a landlord cannot serve a Section 21 Notice to bring the tenancy to an end if the deposit is not being held in accordance with an authorised scheme. The Court at first instance held that the landlord's Section 21 Notice was valid. However the tenants appealed.
The Court of Appeal allowed the tenants' appeal on the basis that as the deposit had never been held in accordance with an authorised scheme, the Section 21 Notice was not valid. Accordingly the landlord was not able to bring the tenancy to an end.
This is a complex area but the case clearly illustrates the importance of ensuring that a tenant's deposit is held in an appropriate scheme particularly on renewal of a residential tenancy.
For more information on the case visit: Case
To discuss this or any other landlord and tenant related issue contact us.