SUPER STRIKE TO TENANCY DEPOSIT PROTECTION RULES
contributed by Satish Harpalani
The recent Court of Appeal decision in Superstrike Ltd v. Marino Rodrigues has caused fresh uncertainty over the operation of the Deposit Protection Rules for Landlords. In that case, where the deposit had been paid prior to 2007, the judge ruled that the Landlord should have protected the deposit when the initial short-hold tenancy came to an end because the resulting periodic tenancy was a new tenancy. In Superstrike, the fixed term tenancy ended after 2007 and a statutory periodic tenancy started because the Tenant stayed on. The Landlord argued that because the deposit had been paid prior to section 213 of the Housing Act 2004 coming into force in April 2007, the deposit protection rules did not apply to this case. But, in agreeing with the Tenant, the Court of Appeal held that the deposit had to be regarded as being paid and received in respect of the statutory periodic tenancy, and as the Landlord had failed to protect the deposit or serve any prescribed information it was unable to regain possession of the property.
General impact of this decision on other deposits
This decision potentially also affects all deposits taken after 2007, even where they have been protected, if a statutory periodic tenancy subsequently comes into being and the Landlord has not served the prescribed information upon the Tenant that the deposit under the new periodic tenancy is protected. Housing minister, Mark Prisk, has confirmed that this was not the intention of parliament when passing the legislation and that the government are considering whether new legislation is required to address the situation. In the meantime, in order to protect themselves in such circumstances, Landlords could decide to re-serve the prescribed information upon their Tenants which may ensure that they can rely upon the section 21 procedure if they wish to end the tenancy.
Each case is different and it may also be advisable to re-protect the deposit or enter into suitable communication with the tenant to avoid future uncertainty. In all such instances it is therefore important that you take appropriate advice in the matter.
Satish Harpalani is a Solicitor-Advocate (All Higher Courts) at Harpers, Solicitors & Advocates, 75 Gray’s Inn Road, Holborn, London WC1X 8TS. Tel: 020 7405 8888.