Buying tenanted property – can you ‘reset’ the tenancy to ensure it is valid?

I think there is some confusion. The new owners ie. new landlords, of the assigned registered title, take on the liabilities of the existing AST tenancy. That is within the LTA.
What I am saying is that I don't think the omission of pre-tenancy prescribed information (such as a valid gas safety certificate or EPC) can be saved under s.21 proceedings even if tenant and landlord mutually agree to a 're-set'. A Deed of Surrender of the existing tenancy and immediate grant of a new tenancy ( with correct prescribed information supplied) might be regarded as a 'replacement tenancy'. Any thoughts on this?

Reply to the comment left by Abim' Mabadeje at 30/01/2023 - 21:15Apologies. Some typos
As the new landlord, the best thing to do is to ensure compliance. As long as you have serve all the relevant notices, and ensured compliance in all other areas, you should be fine.
In the relevant caselaw, the landlord protected the deposit before the tenant took proceedings. The tenant's application was dismissed.
Suupere v Nice [2011] EWHC 2003 (QB); [2012] L&TR 11.

Reply to the comment left by Layla . at 30/01/2023 - 11:12
The case is the Court of Appeal decision in Trecarrel. Its not entirely good news as the decision was confined to its facts. The Supreme Court refused permission to appeal to the tenant. See https://propertyindustryeye.com/important-supreme-court-ruling-in-section-21-gas-safety-certificate-case/

Reply to the comment left by Abim' Mabadeje at 30/01/2023 - 21:34
I just googled this and from what I can tell, even though the lower court threw it out, the court of appeal upheld it and the landlord had to pay the fine. Not good news.

https://nearlylegal.co.uk/2012/11/informing-deposits/

Reply to the comment left by Laura Coleman at 30/01/2023 - 13:00
Laura, you don’t specify exactly what items haven’t been complied with, but off the top of my head I think all can be rectified to serve a valid section 21 notice. You may however still be at risk of a monetary penalty.
If deposit requirements haven’t been met, the deposit can be returned and any documents not served when they should have been are able to be served late. After which a section 21 can be served. It’s very late, so I hope I’m not forgetting anything obvious, but I think I’m right in saying that.
You also don’t mention the ages of the existing tenancies because there is a time limit on making claims for unprotected deposits. It’s 6 years from the date it should have been protected.
A new tenancy is a new tenancy, so any tenancies you are able to renew will reset the clock in terms of complying FOR THIS NEW TENANCY. You are therefore in the same position in terms of section 21 notices as you would otherwise have been, however you do not remove your risk of liability fine-wise from the failures in the earlier tenancies.
Essentially what I’m saying is that unless I’m very much mistaken you can certainly reinstate your ability to use section 21s.
If the original landlord doesn’t have proof of service of all necessary documents, prior to completion ensure all affected deposits have been returned to the tenants and the outgoing landlord has served all necessary documents and has EVIDENCE signed by each tenant. Then you are in the position at completion where you know you are legally able to evict a tenant should you need to. Insist on a price reduction to cover your risk of fines, explain that this same issue will come up with any future potential buyers so it’s best for them to agree and move on

Reply to the comment left by Kate Mellor at 31/01/2023 - 00:30
Thanks so much Kate. That's extremely helpful. I haven't received the documentation from the vendor yet so not sure exactly what is non compliant, however in speaking with them at the viewing they basically said those tenants who moved in before they started using the estate agents may need to be looked at. I have asked for the ASTs as a start. I am wanting to do some due diligence before it gets to conveyancing stage and, as you recommend, to help guide what an offer price would be if we did wish to proceed, taking into account the inherent risk.

In regards to the deposit, of the current landlord returns those to the tenants, do we (or the cureent landlord) then re-request them or are you saying we go depositless?

Thanks so much

Reply to the comment left by Laura Coleman at 30/01/2023 - 22:18
There is a distinction.

In the Ayanuga case, lthe landlord had protected the deposit but had not issued the relevant notification to the tenant. He was relying on the fact that the tenancy deposit service had issued the relevant certificate to the tenant, arguing that he did not necessarily need to. The case therefore rested on procedural impropriety.

The Suupere case on the other hand rested on the fact that, albeit the landlord had issued the notice late, he had remedied the situation before the tenant had taken proceedings against him..

I do not see the courts making a decision against some9ne who has sought compliance. "Resetting the tenancy" is certainly not an option.

Reply to the comment left by Laura Coleman at 31/01/2023 - 07:02
That’s a decision for you, based on the facts of each tenancy. If the deposit wasn’t protected either at all, or within 30 days and the prescribed information including terms and conditions served within 30 days of receiving the deposit from the tenant then the deposit MUST be returned before you can issue a section 21 notice, or the notice will be invalid. You will need PROOF that the notices were served and when, so you will have to assume they we’re not served if the seller can’t provide proof of service.
You don’t have to refund the deposit unless you want to evict, so you may decide not to worry too much about that at this point.
What I’ve done with historic, non-compliant tenancies is offer a new tenancy without a fixed term (straight into monthly contractual periodic). Explaining that I want all tenants to be on the same AST agreements, but they’re not committing to a new fixed term.
You tell the tenant in writing that you are using their deposit for their next months rent and their next payment will be their new deposit. So you reclaim the deposit just before their next rent is due. If the rent has gone up in the meantime you explain that to compensate them for any inconvenience you will give them a credit for any difference between the old deposit and the current rent, so their deposit will now be updated and equal to their rent without costing them any more. You then show in your rent records the receipt of the deposit and a credit for the difference and you protect their rent payment within the timeframe required and serve all the documents. That’s that tenancy dealt with whilst retaining a deposit. (Obviously it still retains a potential risk of penalty for the original non-compliance, but you have a deposit and you can evict as needed.)

Agree with the solution put forward by Trevor Leigh.
Once the deposit is returned and the tenancy is ended by say a deed you should be ok to commence new tenancy agreements.
It is very unlikely a tenant can bring a claim once a return of a deposit has been accepted (estoppel will kick in).
An indemnity from the seller should be sought for your piece of mind.
I would tread very carefully as regards to what Kate Mellor suggests relating to converting deposit to rent. There are strict rules around the handling of regulated deposit funds.
All the best.

Reply to the comment left by bean at 31/01/2023 - 10:10
Hi Bean,
There is absolutely no need to use a deed or any kind of formal surrender before signing a new AST with a tenant. A new agreement supersedes any previous tenancy. A new valid tenancy is exactly that. It can't eradicate the failings of the previous tenancy, it just ensures that going forward you are compliant. Unless I'm missing something I don't understand what a deed of surrender would accomplish.

Also, as regards my deposit handling; I hold my deposits in the DPS Custodial scheme, so to use the deposit as rent it must first be refunded. Once a refund is requested the tenant has to actively approve that action with the DPS, so the tenant is deciding where that deposit goes. I also have the tenant's agreement in writing that the money from their old deposit will be used towards their next rent and they will pay over a new deposit. In effect therefore, I have refunded their deposit and they have used it to pay their rent. The tenant has been an active participant, it is in the tenant's interest and no pressure was applied to force them to agree. I'm confident that this would be perfectly acceptable should it be challenged. Of course everyone else should make their own independent, decision on how they handle things.