Court ruling could mean thousands of landlords are breaking the law

A new Court of Appeal ruling could mean that landlords across the country are breaking the law.

Superstrike v Rodrigues concerns a case in which a deposit was taken before 6 April 2007, when the requirement for deposits to be protected came into force. When Mr Rodrigues’ fixed tenancy came to an end, after 6 April 2007, it became a periodic tenancy. When the landlord attempted to serve a section 21 notice to gain repossession, entry was refused on the grounds that a new tenancy had been created after the requirement for protection had begun, and that as the deposit was unprotected the notice was invalid.

The judge ruled in favour of the tenant, insisting that the beginning of a periodic tenancy marks the start of an entirely new tenancy arrangement. “It is clear from the 1988 [Housing] Act,” he said, “that what happens at the end of the fixed period tenancy is the creation of a new and distinct statutory tenancy, rather than, for example, the continuation of the tenant’s previous status. I do not see that there can be any doubt as to that.”

What does this mean for me?

This has serious implications for all landlords. Although the ruling may yet be appealed in the Supreme Court, the potential results are twofold:

If your tenancy began before 6 April 2007

In cases in which a tenancy began before 6 April 2007, the date on which the requirement for deposit protection began, and the fixed term tenancy has become a statutory period tenancy, you must protect the deposit. Superstrike v Rodrigues means that statutory periodic tenancies are treated as entirely new tenancies, and deposits must therefore be protected within 14 days. Failure to do this can result in a penalty of three times the original deposit - and, as the case demonstrates, in your inability to regain possession of the property.

If your tenancy began on or after 6 April 2007

Clearly, though, this case has potential implications for all periodic tenancies. If it is accepted that they are “new and distinct”, as opposed to a continuation of a fixed term tenancy, and that the deposit is deemed to have been ‘retaken’ at this point, regardless of whether or not a physical payment has been made, then it would seem to follow that tenants need to be provided with the statutory information about their deposit protection whenever the periodic tenancy is renewed.

Landlords across the country will be waiting for clarification on this point, but a ‘better safe than sorry’ approach to this issue could help to prevent significant problems at a later date.