The Court of Appeal has struck confusion into the heart of tenancy deposits.
In Superstrike Ltd v Rodrigues, the Court of Appeal looked at whether a landlord who took a deposit before the tenancy deposit legislation came in during April 2007, needed to register the deposit and issue the prescribed information when the fixed term tenancy ended and the tenant remained after April 2007.
The Court decided that when the fixed term tenancy ended after April 2007, and the tenant stayed in the property, the periodic (month by month) tenancy that arose constituted a new tenancy.
It was implied by the court that a deposit was “received” at that time and therefore the deposit ought to have been registered and the prescribed information provided. As it wasn’t, the Court considered the landlord at fault.
Accordingly the Section 21 notice requiring possession was invalid and the landlord would also be liable to pay compensation.
Although the Court of Appeal did not intend to create uncertainty, the decision in Superstrike v Rodrigues may seriously complicate the administration of tenancy deposits.
The Court of Appeal made the decision on a particular set of facts, namely a tenancy that started before April 2007 but became periodic after April 2007, but the wording of the judgment may have wider implications.
In ruling that deposit is again “received” at the start of a periodic tenancy, the Court has unwittingly placed landlords at risk of serious financial penalty, since receipt of a deposit triggers an obligation to register and serve the prescribed information.
The ruling raises two particular questions.
First, does the ruling now mean that all landlords since 2007 who have failed to re-register deposits and re-issue prescribed information may be liable to compensate their tenants?
Second, as any Section 21 notice is invalid if a landlord has not complied with the tenancy deposit legislation, have some tenants been illegally evicted, thus leaving landlords open to further claims?
The presence of top barristers acting in a case of little financial value indicates its vital importance to tenancy deposit legislation.
Clearly the Court of Appeal did not wish to create confusion when making statements that applied to a particular set of circumstances, but the resulting lack of clarity has raised serious questions over the tenancy deposit schemes.
Further judicial guidance is required to make the law for landlords coherent.
Luke Maunder is a solicitor with Barlow Robbins
http://www.barlowrobbins.com
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