The Court of Appeal held that a landlord had not been entitled to serve a notice for possession under the Housing Act 1988 s.21 where the tenant's deposit had not been held in accordance with a tenancy deposit scheme authorised under the Housing Act 2004, notwithstanding that the original fixed term AST had commenced prior to the provisions for tenancy deposit schemes in the Housing Act 2004 coming into force.
On 8 January 2007, the claimant company granted the defendant an assured shorthold tenancy for a term of one year less one day at a monthly rent of £606.66. In accordance with the terms of the tenancy agreement, the defendant paid a deposit of £606.66, which was retained by the company. On 6 April 2007, the provisions of the Housing Act 2004 Pt 6 Ch.4 , relating to tenancy deposit schemes came into force. In January 2008, on expiry of the term, the defendant became a statutory periodic tenant pursuant to s.5 of the Housing Act 1988. On 22 June 2011, the company served notice requiring possession under s.21 of the 1988 Act . Subsequently, it issued possession proceedings. A possession order was made but was later set aside by a district judge on the ground that the deposit was not being held in accordance with a tenancy deposit scheme. The company successfully appealed to a circuit judge who held that the provisions of the 2004 Act did not apply as the deposit had been paid before they had come into force. The defendant appealed to the Court of Appeal.
The Court of Appeal held that the statutory periodic tenancy which arose in January 2008, under the Housing Act 1988 s.5 , was a new tenancy; as the fixed-term tenancy had contained a term requiring a deposit to be paid, the statutory periodic tenancy also contained such a term. At the end of the fixed term, the claimant company had neither returned the deposit to the defendant nor sought payment from the deposit for any breaches of the tenancy agreement; the defendant was to be treated as having paid the amount of the deposit in respect of the statutory periodic tenancy by way of set-off against the landlord's obligation to account to him for the deposit at the end of the fixed term; accordingly, the defendant had paid a deposit in respect of the statutory periodic tenancy which should have been dealt with in accordance with a tenancy deposit scheme; as the company had failed to so, it could not give notice under s.21 of the Housing Act 1988. The possession order ought not to have been made.
Ranjit Bhose QC and Jennifer Oscroft acted for Superstrike Ltd.