Landlord and tenant deposit disputes

By Stephen Slater, Senior Caseworker & In-House Advocate at OTS Solicitors

At the end of tenancy there is a familiar scenario, landlords want to retain the tenant deposit and tenants want to secure the early release of their deposit. As landlord and tenant deposit dispute solicitors we often get called in to give advice on the law relating to landlord and tenant deposit disputes and the impact of a landlord not complying with tenancy deposit legislation.

Landlord and tenant deposit dispute solicitors

If you need legal advice about a landlord and tenant deposit dispute then the landlord and tenant team at OTS Solicitors can help you. Call us on 0203 959 9123 or complete our online enquiry form for a video conference, Skype or telephone appointment.

Tenancy deposit disputes

At the end of a tenancy agreement landlord and tenants have to tackle the topic of the return or the retention of the tenancy deposit. If the tenancy deposit was paid after the 6th April 2007, then under the law a landlord (or their letting agent) must use an approved tenancy deposit protection scheme to protect a tenancy deposit.

Whilst some may think that it is obvious when a tenancy agreement began the law on landlord and tenant deposits and tenancy start dates isn’t as straightforward as some landlords think. Many London landlords have long standing tenants and aren’t aware of the tenancy deposit issues that can arise when they give notice to a tenant. The case of Superstrike Ltd v Marino Rodrigues may be an old court case but it still serves as a very useful warning to landlords about the need to take advice on the intricacies of tenancy deposit law and how it is best to take expert legal advice before serving notice on a tenant.

The case of Superstrike Ltd v Marino Rodrigues

Superstrike Ltd v Marino Rodrigues [2013] EWCA Civ 669 is a court case about tenancy deposit that demonstrates just how complex and costly the law on landlord and tenant deposit disputes can be.

The landlord, Superstrike Ltd rented a property on an assured shorthold tenancy to Marino Rodrigues. The assured shorthold tenancy agreement was dated the 8 January 2007, some three months prior to the date of April 2007, after which date landlords are legally obliged to protect a tenant’s deposit by using a recognised tenancy deposit scheme.

You may think that the landlord could therefore safely assume that there was no need to protect a deposit paid prior to April 2007 through using a regulated tenancy deposit scheme. After the initial fixed term tenancy agreement of one year less one day, at a rent of £606.66 per month, the tenant became entitled to a statutory periodic tenancy on the same rental terms. No new deposit changed hands between landlord and tenant when the assured shorthold tenancy expired and the tenant began to occupy the property as a statutory periodic tenant rather than as an assured shorthold tenant. The initial assured shorthold tenancy deposit wasn’t returned either.

The landlord assumed that the deposit scheme rules didn’t apply to a tenancy deposit paid prior to April 2007. About four years passed by and the landlord served notice on the tenant under section21 of the 1988 Housing Act requiring possession of the property. The landlord was granted a possession order in the county court under the accelerated procedure. However, in a twist to the tale, the possession order was then set aside on the grounds of landlord noncompliance with the provisions relating to tenants’ deposits. There was an appeal and the possession order was reinstated.

The tenant appealed to the court of appeal against the possession order and the court of appeal examined the law on whether if a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy at any time when either:

• The deposit is not being held in accordance with an authorised deposit scheme, or
• The initial requirements of the tenancy deposit scheme have not been complied with in relation to the deposit.

The law says that if the tenancy deposit law isn’t complied with in relation to a deposit given in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy until such time as tenant deposit law is followed.

The landlord argued that they were entitled to serve a section 21 possession notice on the tenant because the tenancy deposit was paid to them before April 2007, when the property was first let to the tenant. The landlord‘s representatives argued that the wording in the legislation referred to the date the money was received by the landlord (January 2007) and not the date of the statutory periodic tenancy that arose on the expiry of the assured shorthold tenancy (January 2008). Therefore it was the landlord’s case that as the deposit money was paid before April 2007 they weren’t in breach of the tenancy deposit scheme rules as the scheme rules didn’t apply to the deposit.

The court of appeal decided that the 1988 Housing Act legislation meant that at the end of a fixed period tenancy (such as an assured shorthold tenancy) a new and distinct statutory tenancy was created rather than the continuation of the tenant’s old status as a fixed periodic or assured shorthold tenant.

The court of appeal went onto decide that as the January 2008 statutory tenancy was a new tenancy the deposit monies paid at the start of the original pre April 207 assured shorthold tenancy were treated as the deposit monies for the statutory tenancy, even though no money physically changed hands between the landlord and tenant. As a result of that ruling the court went onto find that the landlord hadn’t given the tenant the required information about the tenancy deposit or secured the monies in a tenancy deposit scheme. Accordingly, the landlord could not gain possession of the property using a notice under section 21 of the Housing Act 1988. A point to note though is that the landlord could serve notice under section 8 of the Act.

What next?

If you are a landlord wanting advice on how to comply with tenancy deposit rules at the expiry of an assured shorthold tenancy and the start of a statutory tenancy or need representation in a tenancy deposit dispute it is best to take legal advice from expert landlord and tenant solicitors so that you know your legal rights and your landlord responsibilities.

Landlord and tenant deposit dispute solicitors

If you need legal advice about any aspect of landlord and tenant law or need representation in a landlord and tenant deposit dispute then the friendly and efficient landlord and tenant team at London based OTS Solicitors can help you. Call us on 0203 959 9123 or complete ouronline enquiry form to arrange an appointment via video conference, Skype or telephone.