Deposit Protection – Serving Prescribed Information

There was a decision on 8th May 2014 in the Birmingham County Court in a case of Gardner –v- McCusker that has an impact on all landlords where they allow a tenant to remain in their property on a statutory periodic tenancy which commences and continues after the end of the fixed term of the assured short hold tenancy.

The Court of Appeal in the case of Superstrike Limited –v- Rodriguez found that where a deposit was paid by the tenant in relation to an Assured Shorthold Tenancy that was entered into before the tenancy deposit registration rules came into force in April 2007, that when the tenant remained in occupation under a statutory periodic tenancy, which started at the end of the initial fixed term (and that date is after 6th April 2007), that there is an obligation on the landlord at that stage to comply with the requirements of the Housing Act 2004 in respect of the registration of the deposit with one of the statutory deposit schemes. This is also in connection with the obligation to serve the prescribed information on the tenant within 30 days.

The decision in Gardner –v- McCusker has now extended this to the circumstances where the Assured Shorthold Tenancy was entered into after 6th April 2007, and in circumstances where the landlord had properly protected the deposit and served the prescribed information at the start of the assured short hold tenancy.

The Court held that the landlord is required to comply with the tenancy deposit registration requirements in relation to the new tenancy – being the continuation tenancy – from the end of the initial fixed term.

This means that even though the deposit had been properly registered, and indeed can remain registered in the same manner, the landlord must, within 30 days of the end of the initial fixed term, again serve on the tenants the necessary prescribed information in relation to that deposit scheme.

There is a risk that if this prescribed information is not re-served, then any Section 21 Notice that is subsequently used to seek possession would be invalid.

Recommendation

We would urge all landlords and agents to review the position of all their residential tenancies and in particular those where the tenants have remained in the property on a statutory periodic tenancy after the end of the fixed term.

In those circumstances, it is suggested that either steps are taken to immediately agree and enter into a fresh tenancy with the tenant and re-serve the prescribed information on the commencement of that new tenancy, or, in the alternative, re-serve the prescribed information confirming the protection of the deposit originally.

Ultimately it is necessary to:-

a) Be satisfied that the initial requirements of the authorised tenancy deposit scheme had been complied with at the outset; and
b) The fresh prescribed particulars have been served within 30 days of the end of the fixed term, or as soon as possible thereafter.