Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

by Mark Alexander

20:45 PM, 16th June 2013
About 7 years ago

Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

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Superstrike Ltd vs Rodrigues Tenancy Deposit Protection Court of Appeal

Superstike vs Rodrigues Tenancy Deposit Protection Court of AppealMy reading of a recent Court of Appeal ruling (Superstrike Ltd vs Rodrigues) is that thousands of possession orders may have been granted in error due to lack of clarity in Tenancy Deposit Protection legislation.

What’s worse is that the vast majority of landlords may have inadvertently broken the law and face bankruptcy!

Scary stuff hey?!

So what is it all about?

Well, in the case of Superstrike Ltd vs Rodrigues, a legal argument affecting Tenancy Deposit Protection, the Court of Appeal has held that a Statutory Periodic Tenancy is not in fact a continuation of a fixed term tenancy and is in fact a brand new tenancy. The legal implications are that deposits paid by tenants needed to be re-protected within 30 days of the new statutory periodic tenancy being created.

How many landlords re-protect tenants deposits and re-issue a new tenancy deposit protection certificate and prescribed information within 30 days each time a fixed term AST ends and a Statutory Periodic Tenancy begins?

Very few I suspect.

The ramifications of this ruling are that landlords might be liable to be fined 3X the deposit plus the deposit and be prevented from enforcing a section 21 notice if a deposit was not returned to the tenant before the notice was served.

Getting worried?

You and me both!!!

It is too late to do anything for every tenancy that became statutory periodic more than 30 days ago.

This was not what I wanted to hear so I read the full details of the judgement

PLEASE, don’t shoot the messenger!!!

Hopefully, the legal eagles reading this will be able to pick holes in the legal argument. I’m also hoping a Supreme Court will eventually add the further clarity now required to the Court of Appeal decision or that new emergency legislation will be introduced to prevent the possible collapse of the Private Rented Sector as we know it.

Yes people, it’s that serious!

Can you afford to pay fines of up to four times the value of every deposit you or your letting agent has collected from tenants in the last six years in respect of fixed term tenancies which have become statutory periodic tenancies?

OK, so having now scared the pants off most of the people who read this, let me pose a few questions to the legal eagles and the politicians who are responsible for this mess. We must not forget that all of this has come about as a result of badly drafted legislation which was passed by politicians. Furthermore, it appears that judges may have been making bad decisions on possession cases due to incorrect interpretation for years. If politicians, judges, solicitors and deposit protection schemes have not been able to get clarity on what the law was meant to be then what hope for landlords and letting agents?

If the latest ruling is legally correct, how many possession orders have been granted which should not have been granted? Who is liable for these cock-ups? I suspect many of the people who have lost their homes will want compensation but who will they get it from?

Next question.

Might it be arguable that our tenants did not apply for a refund of their deposit at the end of their tenancy and that no deposit was in fact necessary for the new statutory periodic tenancy? Might this be a viable argument in that it was never written anywhere? If so I can’t see how landlords can be fined on that basis. That doesn’t help the possession argument but it might avoid mass bankruptcies amongst landlords.

Do landlords have any recourse to tenancy deposit protection providers where they have issued advice on forums like this one? The reason I ask this is that I can easily produce evidence to prove that all deposit protection providers interpretations of the law and their advice relating to this issue have clashed with the ruling in this Court of Appeal case.

Perhaps the most worrying aspect of all of this is that one ambulance chasing law firm have already set in place a “no win no fee” opportunity for tenants to begin making claims against their landlords.

Now, given that it will be in ALL landlords interest to unite at this point, please may I remind you of The GOOD Landlords Campaign and your ability to contribute to the work we do here when you become a member of Property118

Please post comments below. Comments from members are easily identifiable.

 


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Comments

12:15 PM, 17th June 2013
About 7 years ago

@Mark - Yes, a friend of mine is a Letting Agent and we both noticed the difference between the Landlord & Letting Agent protection criteria... Letting Agents using the TDS had been told NOT to re-register deposits when they go into periodic tenancies!

Mark Alexander

12:23 PM, 17th June 2013
About 7 years ago

@Eleanor White - I believe the Landlords Guild are wrong in their interpretation. I would, of course, like them to be right. I will take a look at their forum.

Mark Crampton Smith

12:25 PM, 17th June 2013
About 7 years ago

@markA I have emailed my PI insurers to make sure that we cannot be accused of not bringing a potential claim to their attention in good time. Having said all that, we only have a handful of periodic agreements....... we take the view that one month's notice is not sufficient to ensure void free lettings (even in Oxford) and so less than 5% of our managed ASTs are statutory periodic. I have always felt periodic agreements are sloppy practice; and none of this changes my mind!

Mark Alexander

12:39 PM, 17th June 2013
About 7 years ago

@Mark Crampton Smith - as your business model is based primarily of the Oxford student market I do understand your perspective and that your model does make sense for your market and your xclients.

I also think many letting agents abuse renewals as an opportunity for profiteering though. As I can let my properties at pretty much any time of the year I consider renewals to be unnecessary. Further, I believe that renewals actually expose me to greater risk as it extends the period for which I am unable to serve a section 21 notice if necessary.

Horses for courses I suppose.

Nonetheless, we are both equally in the dodo today!

12:40 PM, 17th June 2013
About 7 years ago

As they are recognised as two separate agreements, this could also mean that any Landlord who has completely failed to protect a deposit during a fixed term tenancy, which then runs into a periodic tenancy, could ultimately be liable for a penalty of up to 6x deposit + return of the deposit!?

12:46 PM, 17th June 2013
About 7 years ago

So what do us little landlords do now? Do I give a new tenancy agreement to my tenants and re-register their deposits? The periodic ones I have are all over 30 days old now.

Mark Alexander

12:53 PM, 17th June 2013
About 7 years ago

@June - and all.

Best practice at this stage is not to serve a section 21 notice unless you have first returned the tenants deposit in full or got them to agree in writing to any deductions.

Sadly, if tenants have caused damage or are in arrears the above still stands.

As for liability for fines, well I'm afraid we are all at the mercy of the Courts if we failed to issue a new deposit protection certificate and prescribed information within 30 days of a fixed term tenancy expiring and becoming a NEW statutory periodic tenancy.

neils26

12:56 PM, 17th June 2013
About 7 years ago

I believe this to be scaremongering (sorry Mark). As if we don't have enough to deal with in this awful business.

Here's segment of an Email received from rla's DepositGuard scheme on 26th March 2013 :

"3. Renewing protection at the end of the fixed term - When the fixed term expires we will now assume it is continuing on a same terms statutory periodic basis. Protection will be continued automatically and you do not have to do so manually. N.B If the tenancy is continuing but not on the same terms you still must protect the deposit again. Failure to do so remains a breach of our rules."

Another email received on 16th May 2013 :

"Improvements to website
Following feedback from members, we have recently made several improvements to the TDS website making it easier and faster to use.
"As well as renewing fixed term tenancies automatically to become statutory periodic tenancies, you can also now end a tenancy by clicking on the 'End Tenancy' link on the member page. then you just need to click whether or not the tenancy ended in dispute then we will archive the record.
Also keep an eye out this summer for a new evidence portal where you will be able to upload dispute evidence in real time - more information to come, so watch this space!"

So clearly they are Renewing Automatically, and do not require further payment. So assuming renewal is in fact valid withour further payment, then surely there's no issue here ? I speak as a private landlord who deals direct with tenants, and does not use letting agents. I think this also illustrates that taking deposits is more trouble than its worth, and we'd be best to consider not using them any more. My only problem is that I've insured multi '£000s of deposits, and cannot afford to return them all as tenants rotate, without taking deposits from new tenants....

Alex Williams

12:58 PM, 17th June 2013
About 7 years ago

Beats me why anyone ever bothered with deposits. I don't. It has always been a good shout and looking increasingly more so every minute now 🙂

Mark Alexander

13:00 PM, 17th June 2013
About 7 years ago

@Neil - I can assure you this is not scaremongering. I suggest the emails you are referring to are, however, very solid evidence to demonstrate the widespread lack of clarity relating to this law. If a deposit protection provider interprets the law differently to three Court of Appeal Judges what is the hope for landlords and letting agents?

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