Landlord and Tenant

Landlords must Protect Deposits by Today

Clarification of a tenancy law loophole that has stood for two years means that many landlords must now protect their tenants’ deposits before the deadline to do so elapses today.

The Housing Act 2004 came into effect in 2007, and required deposit protection schemes to be used to safeguard tenants’ deposits in the event of a dispute when they moved out.

At the time, there was confusion over whether long-term tenants who had moved into their property before 2007 were subject to the same level of protection.

In 2013, the case Superstrike v Rodrigues ruled that tenancies that began before April 6th 2007, and which then became statutory periodic tenancies, should be treated as new tenancies and the deposit protected accordingly.

Cue two years of vexatious claims from tenants with unprotected deposits, and considerable doubt among landlords and agents as to where they stand.

Finally, the Deregulation Act 2015, which was introduced in March of this year, has clarified that deposits received before April 6th 2007, which have since become statutory periodic tenancies or have been renewed since that date, must be protected under a government-approved scheme.

ARLA, the Association of Residential Letting Agents, welcomed the clarification and the elimination of the legal loophole.

Managing director David Cox said: “Landlords have until June 23rd 2015 to comply with this new provision and we urge all our members to check with their clients whether their existing tenancy agreements will be affected and to act accordingly.

“If landlords fail to comply they could be liable for sanctions, which include a potential claim by the tenant for compensation of up to three times the amount of the deposit paid, or find themselves unable to bring a tenancy to an end through a Section 21 notice.”

By H Pipes & Co Solicitors