Government to step in to resolve Deposit Protection ambiguity

by Mark Alexander

9:44 AM, 20th June 2014
About 5 years ago

Government to step in to resolve Deposit Protection ambiguity

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Government to step in to resolve Deposit Protection ambiguity

At last it seems that common sense will prevail in Westminster. Government to step in to resolve Deposit Protection Ambiquity

Last year the Court of Appeal ruled (in the case of Manual Rodriguez vs Superstrike Limited) that statutory periodic tenancies are indeed new tenancies . This cast a shadow over interpretation of the law and whether or not new deposit protection prescribed information needs to be served when a fixed term tenancy ends and automatically rolls over to being a statutory periodic tenancy.

This ambiguity resulted in a state of panic for landlords and letting agents and sent their representative bodies into a spin given that consensus of opinion and most associated advice was that once a deposit was protected that was all that was required. The Superstrike case cast doubt over whether a tenant could claim compensation equal to the deposit plus three times the deposit for failing to serve prescribed information again within 30 days of a tenancy becoming a statutory periodic tenancy.

Ministers acknowledged the issue relatively quickly and agreed that the drafting of the legislation upon which the Court of Appeal had ruled was indeed ambiguous and not as intended, hence they committed to legislating to correct the situation 

Much of the progress of the Deregulation Bill through parliament has already taken place and while the amendments will first need to be agreed by both Houses it is unlikely to meet too much resistance.

If passed, the changes in legislation will mean that all landlords with tenancies that commenced post April 2007 and which were originally compliant with deposit protection legislation will be deemed to have complied.

A 90 day amnesty is proposed for landlords who have tenancies commencing pre April 2007, and which have become periodic and for which a deposit is still held, following commencement of the legislation in order to protect the deposit and serve the appropriate prescribed information.

For all tenancies that have ceased or where a deposit is no-longer held, it is proposed that landlords will be deemed to have complied.

TWEETS …

 

 



Comments

Ian Ringrose

10:02 AM, 20th June 2014
About 5 years ago

It is a shame that the government has not instructed the court to delay any deposit protection cases until after this is sorted out.

Mark Alexander

11:13 AM, 20th June 2014
About 5 years ago

Reply to the comment left by "Ian Ringrose" at "20/06/2014 - 10:02":

Do you know for sure that's not the case?

If it is, would that not mean also mean that no section 21 possession cases can be heard either?

Be careful what you wish for!
.

Gary Nock

11:39 AM, 20th June 2014
About 5 years ago

Hallelujah. Will save me loads of time, money and effort sending out additional Deposit Protection Forms after end of AST and start of periodic.

Alex Williams

23:22 PM, 20th June 2014
About 5 years ago

Why on earth does anyone bother with deposits nowadays. I stopped when the DPS came in and it is far and away the best shout. Anything I lose by not having deposits is outweighed by the work not having them saves.

Moreover most bad tenants default on at least enough rent in order to ensure any money I would have held as deposit is worthless against cleaning and repairs anyway.

Gary Nock

23:56 PM, 20th June 2014
About 5 years ago

Reply to the comment left by "Alex Williams" at "20/06/2014 - 23:22":

"Moreover most bad tenants default on at least enough rent in order to ensure any money I would have held as deposit is worthless against cleaning and repairs anyway"

Sorry Alex am I missing something here?

No deposit means no commitment and no incentive to look after a property and most rent insurance schemes build in one months excess to any policy. Take 6 weeks rent as a deposit, do a good inventory and get the deposit protection right ( its not rocket science) and you are in the pound seats. Horses for courses I suppose but it has saved my backside more often than not.

Alex Williams

0:19 AM, 21st June 2014
About 5 years ago

Well yes, with respect I think you are missing something.

My experience with deposits prior to the introduction of the DPS scheme was that

* I always ended up paying all the deposits back to good tenants, these tenants paid all their rent and waited after the end of the tenancy for their money back

* Almost all marginall poor or bad tenants, becuase they all know what will happen with their deposit for 'that wine stain' or 'lack of cleaning' or whatever just simply default on enough rent at the end of the contract to make it impossible for me to use their deposit for damage restitution.

* I have a lot of tenants so most of my time I take deposits / would have to do loads of paperwork / would have to pay the deposits back.

* I don't bother with deposits. The tenants from whom I deserve restitution get away with it (as they always did) but I save myself piles of paperwork and time which for me adds up to more than I have to spend putting things right.

Gary Nock

0:34 AM, 21st June 2014
About 5 years ago

Reply to the comment left by "Alex Williams" at "21/06/2014 - 00:19":

So the thousands of landlords who take deposits have all got it wrong then Alex?

Alex Williams

0:36 AM, 21st June 2014
About 5 years ago

Yes, in both my view and experience I would say so. I think most are wasting their time and effort for the resons I have stated above.

Romain Garcin

11:16 AM, 21st June 2014
About 5 years ago

This is a very narrow amendment for a very narrow case.

It would be good to see a real re-drafting to solve any issues once and for all e.g. by making clear that once a deposit has been protected and PI given for the first tenancy the landlord need not do anything more for all and any replacement tenancy.

DC

12:34 PM, 21st June 2014
About 5 years ago

Reply to the comment left by "Romain " at "21/06/2014 - 11:16":

Unless Mark has completely misinterpreted the information he has been privy to this is intended to clarify that the legislation is to be amended if passed, once agreed by both Houses, for how ALL post 2007 deposits require no additional reprotecting in respect of Prescribed Information.

It‘s not just the very specific situation of the Superstrike case where the deposit had never been protected in the first place, it’s for all those deposits that have been properly protected for an AST where they then roll over onto a SPT.

If you understand the post to mean something totally different perhaps you could enlighten us because this is how amendment to law in Britain is generally dealt with.

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