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How the Deregulation Act affects tenant deposits

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A new act of parliament that aims to clarify the rules relating to prescribed information in existing legislation covering the tenancy deposit protection scheme has received royal assent.

londoncityThe Deregulation Act 2015 contains a number of new rules covering tenant deposits that landlords need to be aware of.

Every landlord has a statutory obligation (under the Prescribed Information Order) to make certain information regarding the tenancy deposit protection scheme protecting the deposit, the deposit and specified tenancy-related information is available to their tenants.

However, doubts about the rules relating to the serving of prescribed information surfaced in 2013 after the Superstrike vs Rodrigues judgement.

This was a court of appeal decision regarding a deposit that was taken before the tenancy deposit regulations came into force in April 2007, but where the rental agreement continued as a periodic tenancy after that time.

The court ruled that as a periodic tenancy is a new tenancy, this meant the landlord had an obligation to protect the deposit and serve the prescribed information at that time.

And the Charalambous vs Ng judgement ruled that a Section 21 notice served on the tenant was invalid because although the deposit was taken before April 2007, it was not protected and PI was not served.

We covered what effect the Deregulation Act 2015 will have on eviction notices served under Section 21 of the Housing Act last week. This blog covers how this now legislation will impact how landlords handle tenant deposits.

4 changes landlords must be aware of:

1. If you took a deposit on any Assured Shorthold Tenancy before April 2007 and have not protected it or served the PI, you will not be able to issue a Section 21 notice at any point in the future. However, it’s important to note that there are no penalties for any landlords who don’t protect deposits in these circumstances.

2. If you took a deposit on a tenancy since 6 April 2007, protected and served the PI and the tenancy has since either rolled into a statutory periodic tenancy or been renewed, you will be deemed to have complied with the new legislation as long as the deposit is still protected in the same scheme and the tenancy details have not changed. In other words, this specific change overturns Superstrike vs Rodrigues.

3. If you took a deposit on an AST before April 2007 and the AST rolled into a SPT or was renewed after April 2007, then the deposit must be protected and PI served by 23 June 2015. You will not be able to serve a Section 21 notice and WILL be liable for penalties for non-compliance until you’ve protected the deposit.

4. The final change allows the agent’s details to be used on the PI where they have taken and protected the deposit on the landlord’s behalf. Previously there was doubt as to whether the agent’s details could be provided instead of the landlord’s when the agent took the deposit and protected it on the landlord’s behalf.

What you should do:

Many of these changes may seem complicated, but the key thing is to remember to check when your deposits were protected. Again, consult a lawyer if you’re unsure and remember that Assetgrove can help you keep on top of the maze of legal changes and take the hassle out of the daily challenges of managing property.

If you have any questions make sure you contact a legal professional for further advice.

Neil Jennings

Neil is the Operations Director at Assetgrove Lettings, London's Leading Rent Guarantee Company, providing Landlords with no voids, property maintenance, fee-free property management and stress-free service.

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