Landlord power can and will get Deposit Protection rules clarified

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Landlord power can and will get Deposit Protection rules clarifiedThe potential implications of the ruling that a Statutory Periodic Tenancy is a new tenancy, according to the Court of Appeal ruling in Superstrike Ltd vs Rodruigues, has reverberated around the industry at lightening speed. Every popular landlord forum, blog and Facebook group has carried articles and thousands have been motivated to express concern. Indeed, my own article had over 3,000 readers and 100 comments left within just one day.

My initial reaction was one of pure panic and terror for what the implications might be. However, with time I have come to realise that once the powers that be recognise the implications of not adding further clarity to the legislation, I suspect we will receive the clarity we need.

So what is the ideal outcome we should all be hoping for?

In my opinion it needs to be confirmed that once a deposit is protected, either in a custodial or by an insured scheme, than it remains protected until such time as it is unprotected. The roll-over to a new statutory periodic tenancy is deemed to be a create a new tenancy and is seamless in terms of paperwork. Therefore, the rollover of the deposit protection and the prescribed information needs to be equally seamless and to remain valid providing it was dealt with properly within 30 days of the original fixed term tenancy being created.

Anything else would be ludicrous in my opinion. For example, if the clarification is that it is necessary to re-serve prescribed information again when a new Statutory Periodic Tenancy is created then most landlords would have to re-serve notice monthly. This is because a statutory periodic term is the payment cycle of rent which is typically every month. Thus, a new statutory periodic tenancy is created with every payment.

There may be variations on my suggested theme but as I write this article I can not think of a more logical one.

One thing is for sure and that is WE NEED CLARITY.

The Deposit Protection Providers will, no doubt, be meeting with the law makers to explain the urgent need for this clarification. Remember, their business models are in jeopardy too if landlords and letting agents all decide to stop taking deposits and find alternatives. I suspect the Council of Mortgage lenders are worried too!

Landlords and letting agents must add pressure for clarity

We can’t just leave it to the Deposit Protection Schemes, we need to make our voices heard.

I thought about starting a petition but then I decided it would be better for the industry and the press to be able to read comments from landlords and letting agents about how strongly they feel about this.

This is YOUR opportunity to have YOUR say.

Please leave a comment below and encourage all other landlords and letting agents you know to do the same

 

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Comments

  • June says:

    I pride myself on being a fair landlord. My houses are to a good, if not high, standard. Cp12s are done when due, repairs done as soon as possible. Deposits are registered when taken and the relevant paperwork completed. It is ludicrous that some judge has now ruled that I am in breach of the law and open to being sued by a tenant and an ambulance chaser lawyer just because I have agreed that my tenants can move to a periodic tenancy. May I suggest that judges and people within the industry who know what they are talking about, get together urgently and sort this mess out. Then responsible landlords like myself will know exactly what they are supposed to do. Talk about moving the goalposts. These judges have moved the flaming pitch!!


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  • Yes well done Mark for getting going quickly on this issue.

    This ruling does not pass the common sense test of being `fair`. This test is not always a legal test l ( although it can be) but it is just what is simply meant as being `fair` using the most common accepted meaning of that word in the English language. When we get exasperated we resort to this `fairness` test and scream from the rooftops `But its just not fair`.

    The word `fair` has lots of power in our language sometimes legally sometimes morally. It leads to change.

    This occurred with the recent BoI mini scandal when they tried to raise their SVR by too much, citing some obscure clause. They played a slippery game and they knew it. Technically they argued they could but it just wasnt fair.

    This decision is different somewhat in its structure and its motivations but it may have been made because someone interpreted some words in a certain way. That way one could argue was technically correct but the ultimate beauty of words is that they are just words and what they mean today may have a different meaning tomorrow.

    As a result I have no doubt this ruling will be overturned and normality and fairness will return. It just have to be given time to play out so save face more than anything else. Property 118`s power as a social media force along with other forums will make this process far far quicker than it did in the bad ol days 20 or so years ago when things which were blatantly unfair took far far longer to rectify

    Social media increasingly plays its part and is a very important and useful tool in todays society for turning these types of wrongs into right. Power to the people used to often mean a demonstration via a walk and placards.

    Now I can just as effectively demonstrate on my keyboard from the comfort of my home……… Which at my age is far more relaxing!


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  • Thanks for your very supportive comments so far – please become a Property118 member >>> http://www.property118.com/membership/40048/


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  • Politicians need to be reminded the UK Private Landlords account for more than 1 million votes and that we provide more housing than social landlords which equates to more than 4 million extra votes from tenants of private landlords.

    Can the politicians really afford to allow poorly drafted legislation to screw up the PRS?


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  • Chris Brown says:

    On reading mark’s article, I wrote immediately to my [Plymouth] MP as follows:

    As my MP, please read the attached message from Property 118 and do what you can to sort out his ridiculous mess. Every tenant and landlord has, for years considered the terms by which an AST becomes a periodic tenancy to be a tenancy in two parts and that the document signed by both covers both parts of the tenancy.

    I thought this government was bent on reducing and clarifying red-tape.

    This is your chance to make a difference.

    No reply yet = no vote later – except it was the other lot of idiots that set this all up.


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  • It is a bizarre ruling. I would like to know the reasoning behind it, does anyone have that? If so, please post it.


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  • Guys, as you were, this seems to indicate that there is no need to panic. It is intended to sweep up those tenancies which started before the deposit protection came in. Specifically it refers to one where the periodic tenancy started after the date of the legislation. It has no bearing on deposits which are already protected, which would have made no sense.

    http://www.out-law.com/en/articles/2013/june/landlords-must-check-they-have-protected-the-deposits-of-tenants-who-have-rolled-over-expert-warns/


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  • @Puzzler – I’m not convinced. Until legislation is amended or the Supreme Court judge makes a ruling the lack of clarity remains. Anything else is just opinion.


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  • “In my opinion it needs to be confirmed that once a deposit is protected, either in a custodial or by an insured scheme, than it remains protected until such time as it is unprotected.”

    My agreement could not be more absolute, Mark. The issue for the landlord in question – Superstrike Ltd, the claimant in the county court case which sparked all of this panic – was that they had *not* protected the deposit initially as it was taken prior to 6 April 2007, when deposit protection regulation was introduced. The section 21 was considered to be invalid as the statutory periodic tenancy upon which it was issued began *after* this date.

    Further to your suggestion, I would deem it necessary to consider the *conditions* under which a deposit was taken as on-going, or at least give landlords time now to protect deposits taken under similar circumstances. The problem is that many did not think an SP tenancy counted as renewal, and so many landlords could still be vulnerable to legal action even if your suggestion was followed.

    Another option, one I would favour, would be to clarify specifically that SP tenancies are, in fact, continuations or FT tenancies for the purposes of guarantors, deposits etc, until such a time as either party terminates the agreement.


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  • Bill Black says:

    I’m not quite sure if I’ve grasped this correctly but as far as I understand, this proposal is saying that if a tenant continues the lease after the initial lease term, then the deposit has to be re protected. If this is the case then the whole idea is ridiculous because once the deposit has been handed over to a Tenant Deposit Holding Scheme, it will remain safe and secure there until the tenant or the landlord terminates the lease so why would there be a need to re protect it. As the author above states, more clarification and reasoning for such suggestion is needed.


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