A recent Court of Appeal case brought back into the limelight the issue of tenancy deposit schemes. The decision highlights an issue that landlords may not have fully appreciated but that could have a significant impact across substantial and long-established residential property portfolios.
When Superstrike took Rodrigues to court in June, the Court ruled that Superstrike was unable to recover possession under the Housing Act 1988 s.21 because it had failed to protect the tenant’s deposit. The particular issue in this case was that Rodrigues had been granted a one-year assured shorthold tenancy before the tenancy deposit protection scheme came into force in April 2007, but actually continued to live at the property until 2011, when Superstrike served a notice requiring possession of the flat.
The question was whether Superstrike was entitled to a possession order, even though it had not protected Rodrigues’ outstanding deposit in accordance with the new statutory scheme. Rodrigues contended that Superstrike was obliged to protect the deposit within 14 days of him becoming a tenant under the new statutory tenancy that had come into effect on the expiry of the initial one-year term.
Superstrike argued that as the deposit was received prior to the introduction of the deposit protection scheme, to require landlords seeking possession to make these additional arrangements would be unreasonable. The Court disagreed.
This case highlights the importance of landlords and tenants alike being aware of their rights and obligations when it comes to deposits and the legal consequences of a tenant remaining in occupation of premises beyond the period stated in the agreement.
Landlords should review their portfolios and pay any ‘rolled over’ deposits into a tenancy deposit scheme where they have tenants who occupy under ASTs granted before 6 April 2007 and who have stayed put after the expiry of the initial fixed term, in order to preserve their right to regain possession.
If you have any comments on the above or require any legal advice on any other property matters, then please feel free to contact Richard Holmes on firstname.lastname@example.org
Manchester Real Estate