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Parliament set to amend tenancy deposit scheme?

An amendment to the Deregulation Bill tabled by the Department for Communities and Local Government on Monday 16th June 2014 looks set to resolve an area of uncertainty left in the wake of Superstrike Ltd v Marino Rodrigues [2013] 1 WLR 3848.

Practitioners will recall that in Superstrike the landlord had granted a fixed term tenancy for one year from January 2007 and had taken a deposit from the tenant. A statutory periodic tenancy then arose on the expiry of the fixed term, in January 2008. No new deposit was taken. However, in the meantime the tenancy deposit provisions of the Housing Act 2004 had been enacted. The Court of Appeal confirmed that the statutory periodic tenancy was a new tenancy; and that the deposit taken for the fixed term tenancy had to be regarded as having been paid and received as security for the new statutory periodic tenancy. The requirements of the 2004 Act arose in relation to the periodic tenancy, and because the landlord had not complied with them he could not validly serve a s.21 notice.

Superstrike dealt with a situation where the original deposit was taken prior to existence of the tenancy deposit scheme, and did not therefore resolve the question of how the scheme was to apply to cases where both the fixed term and periodic tenancies commenced after April 2007. In particular the judgment left open the question whether, in a case where the requirements of the scheme had actually been complied with in respect of the fixed term tenancy, it was necessary to re-comply with those requirements when a statutory periodic tenancy arose.

The Government has now signalled its intention to bring clarity to this area with an amendment to the Deregulation Bill. The amendment would provide:

  1. A 90 day grace period within which landlords who took deposits for fixed term tenancies granted prior to April 2007 can put their house in order and register the deposit and provide prescribed information.
  2. Where a deposit was taken for a fixed term tenancy commencing after April 2007 and the requirements of the 2004 Act were complied with:
  3. If a statutory periodic tenancy subsequently arises, the landlord does not need to re-comply.
  4. Where the landlord enters into a new tenancy with the same tenant in respect of the same premises which is not a statutory periodic tenancy (e.g. a new one year fixed term AST), he does not need to re-comply.

The Deregulation Bill is currently in the House of Commons and must still progress through the House of Lords and receive Royal Assent before the above provisions become law. Practitioners who need to advise clients on tenancy deposit issues will undoubtedly want to keep a close eye on developments.