Government to step in to resolve Deposit Protection ambiguity

Government to step in to resolve Deposit Protection ambiguity

9:44 AM, 20th June 2014, About 10 years ago 26

Text Size

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 …

 

 


Share This Article


Comments

Paul landlord

8:09 AM, 22nd June 2014, About 10 years ago

Im in the 'not taking a deposit' camp.

As a landlord with over 40 properties spanning 20 years, I used to take deposits before the protection was brought in and for a few years after, but now find the forever changing poor legislation means too much aggravation particularly when you have gone to a lot of trouble to comply and then Superstrike turns it all upside down.

I deal at the 'affordable' end of the market and find that my policy of 'no guarantor no tenancy' deals with all the issues of tenants looking after the property and my losses in a far greater way than taking a deposit.

I have found that the deposit comes nowhere near to my losses in terms of rent arrears and damage when I do occasionally have a bad tenant- we have all had to evict a tenant with rent arrears of many months and damage on top. What good is the measly deposit then? The Guarantors liability is not limited to the figure of 4 or 6 weeks rent. If my tenants cannot find a credible guarantor then that very often says something about the quality of the tenant and I do not take them. Having my security from a guarantor also means my properties are much more accessible financially by the tenant.

My life has been so much better since I ditched the deposit.

Happy days!

Chris Amis

9:33 AM, 27th June 2014, About 10 years ago

Michael Barnes

21:53 PM, 4th July 2014, About 10 years ago

Reply to the comment left by "Romain " at "21/06/2014 - 15:08":

The amendment, tabled by Philip Davies, that contains the wording
A tenancy deposit shall not be treated as being paid or received in connection with a shorthold tenancy by reason only of the deemed grant of a statutory periodic tenancy pursuant to the provisions of section 5(1) of the Housing Act 1988
was withdrawn 23 June 2014 in favor of the government-sponsored amendment (see http://www.publications.parliament.uk/pa/cm201415/cmhansrd/cm140623/debtext/140623-0003.htm Column 107, 8.15 pm)

The improved wording is in the bill as passed to the House of Lords (see http://www.publications.parliament.uk/pa/bills/lbill/2014-2015/0033/lbill_2014-20150033_en_4.htm#pb5-l1g31 section 31; this is linked from the main page on the Bill at http://services.parliament.uk/bills/2014-15/deregulation/documents.html)

Gilly

20:40 PM, 17th July 2014, About 10 years ago

Reply to the comment left by "paul landlord" at "22/06/2014 - 08:09":

Well that's interesting Paul. Do you know of any guarantor that has refused to settle on behalf of the tenant - and been taken to court? Just asking as I have accepted a tenant with my first ever guarantor and I realise I wouldn't actually know what to do if that happened.

Hopefully the amendment of this ridiculous law on deposits will make it easier for everyone, however I'm sure they'll come up with something else to trip up us with instead.

Neilt

13:28 PM, 16th February 2015, About 9 years ago

I have made a small rental increase on my tenant's lease renewal.
It would appear that the new rules on Deposit Protection save me from having to return and re-issue the original deposit (as instructed by the DPS when I phoned them recently) if the premises let under both tenancies are the same or
substantially the same.
Is a rent increase considered to be "substantially the same"?

Fed Up Landlord

17:29 PM, 16th February 2015, About 9 years ago

If its a new tenancy agreement then serve Prescribed Information as you would for a new tenancy. If it's in the DPS you need not repay the deposit to re-protect it. If it's in MyDeposits you need to pay another £18 and re-protect.

If its an AST that's gone into a statutory periodic tenancy (SPT) then reserve PI within 30 days.

If its just a voluntary rent increase and no increase in deposit then no action needs to be taken-unless it's become an SPT.

Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership

or

Don't have an account? Sign Up

Landlord Tax Planning Book Now