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.