New tenancy deposit rules - An interview with Tessa Shepperton

In June the Court of Appeal made a judgement that could have major implications for landlords across the country.

In Superstrike v Rodrigues the Court turned on its head landlords’ understanding of their responsibilities in periodic tenancies. The case revolved around a deposit that had been taken before the 2007 requirements for protected deposits came into force. The tenancy in question became periodic after deposit protection became mandatory and, on the basis that the deposit for that periodic tenancy had not been protected, the tenant claimed that the landlord did not have the right to serve a section 21 notice to gain repossession.

The Court of Appeal ruled against the landlord in Superstrike v Rogrigues and, as a result, the way in which landlords treat periodic tenancies has changed. The Court held that periodic tenancies are entirely “new and distinct”, and separate from initial fixed term tenancies. As such, it seems to follow that deposits must be reprotected when a periodic tenancy begins.

Landlord Law blogger and solicitor Tessa Shepperson says that the implications for landlords are significant. “The case confirmed that when a periodic tenancy arises at the end of a fixed term, this is a new tenancy,” she says. “Their Lordships further ruled that when the deposit was paid before the regulations came into force in April 2007 and the tenancy became periodic after that time, the deposit would be deemed to be paid back to the tenant and then repaid to the landlord - resulting in the need for re-protection of the deposit and re-service of the prescribed information.

“This is a problem for landlords in this situation as it was generally believed that the regulations did not apply at all to deposits paid pre April 2007.

“There is concern that this ruling could extend to situations where the deposit was paid after April 2007 and properly protected at that time with the prescribed information properly served, and where a periodic tenancy has followed the ending of the fixed term. Here the general understanding was that the prescribed information did not need to be re-served. If the Superstrike case is held to say that it should, many landlords will find themselves in breach of the regulations and vulnerable to claims by tenants for the penalty.”

What should landlords do if they have an existing periodic tenancy?

“If the periodic tenancy arose less than 30 days ago, they should re-serve the prescribed information ASAP,” Shepperson says. “If it arose more than 30 days ago then they can either re-serve the information now or wait and see.

“Mark Prisk, the Housing Minister, has indicated that the government is looking at this situation and corrective legislation may follow. So waiting and seeing may be the best option - unless the landlord wishes to serve a section 21 notice, in which case the prescribed information should be re-served first.

Until further guidance is issued, always re-serve the prescribed information after the end of the fixed term if the tenant remains in the property.”