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The Deregulation Act 2015 – Tenancy Deposits

The Deregulation Act 2015 (which received Royal Assent on 26th March) has now clarified The case of Superstrike Ltd vs. Marino Rodrigues.

The Deregulation Act confirms that any deposits received prior to 6th April 2007 where the tenancy has been renewed or becomes statutory periodic after 6th April 2007 must be protected in one of the three statutory schemes and the prescribed information relating to the tenancy deposit, issued to the tenant.

Landlords must protect any deposits held in connection with a renewal or statutory periodic tenancy which commenced after 6th April 2007 and issue the prescribed information by 23rd June 2015 or, if earlier, before the first day (after commencement of the Act)

In cases where the landlord fails to comply with the requirements, a penalty of between one and three times the deposit may be payable and the landlord will not be able to service a section 21 notice until he has complied.

For post April-2007 tenancies, where the landlord protected the deposit and issued the tenant with the prescribed information in relation to the initial fixed term tenancy there is no need to re-protect or re-issue when the tenancy is renewed or becomes statutory periodic where the tenancy deposit continues to be protected.

The Deregulation Act also confirms the decision in the Court of Appeal case Charalambous & Anor v Maureen Rosairie Ng & Anor [2014] where the deposit was received prior to 6th April 2007 and the statutory periodic tenancy commenced prior to 6th April. In this case the judge held that the deposit should have been protected within an authorised scheme prior to issuing the section 21 notice in accordance with Section 215 (1) (a) which states that ‘if a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to a tenancy at a time when the deposit is not being held in accordance with an authorised scheme.’ No penalty will be payable in this situation. Landlords should protect all deposits held on assured shorthold tenancies in connection with a fixed term or statutory periodic tenancy, whether received before or after 6th April 2007, to ensure valid service of a Section 21 Notice. An alternative would be to return the deposit to the tenant prior to serving the Section 21 Notice.

You can download the regulations at www.legislation.gov.uk