Deregulation Act 2015 – A rule change affecting all landlords who hold tenancy deposits!

If you have failed to protect your tenant’s deposit you can be prevented from recovering possession.

The Deregulation Act 2015 came into force on 26 March 2015 and makes important changes to the Housing Act 2004.  Importantly for landlords, it makes changes to the Tenancy Deposit Scheme and clarifies recent case law.

Tenancies Arising Before 6 April 2007

Landlords who grant an assured shorthold tenancy (AST) on or after 6 April 2007 are required to comply with statutory requirements to:-

– Protect the deposit in a government authorised Tenancy Deposit Scheme; and

– Provide the tenant with certain “Prescribed Information”.

These requirements must be complied with within 30 days of the deposit being received.  If the landlord fails to comply with these requirements they are not able to serve a ‘no fault’ Section 21 Notice to recover possession and can face financial penalty for non-compliance.

The Deregulation Act 2015 extends the protection offered to tenants who were granted a fixed term tenancy prior to 6 April 2007, but then remain in occupation under a statutory periodic tenancy which arose on or after 6 April 2007. The change follows an unpopular ruling by the Court of Appeal in Superstrike v Rodrigues [2013] and now gives landlords the opportunity to retrospectively comply with the statutory obligations. The key is that Landlords MUST protect any deposit held by 23 June 2015.

If a deposit is held in relation to a periodic tenancy which arose prior to 6 April 2007, then the landlord will have to comply with the obligations should they wish to serve a section 21 Notice in the future.

Deposits Taken Since 6 April 2007

The amendments to the legislation also affect tenancies, where a deposit was taken on or after 6 April 2007. There is no longer an obligation on landlords to re-protect the deposit or re-issue the information when the tenancy is renewed, so long as no details of the tenancy have changed. However, the obligations will have to be complied with again should the tenant, landlord or deposit scheme change.

This will prevent landlords being sanctioned where the landlord complied with its original obligations.  However, it also removes from the landlord the opportunity to comply with the obligations when a ‘new’ periodic tenancy arises at the end of a fixed term tenancy.

These amendments offer clarification and consistency to landlords and their obligations with regards to tenancy deposits.  However, it offers no relief to those landlords who received a deposit in connection with an AST on or after 6 April 2007, and failed to comply with the statutory obligations within 30 days.

Do you hold a tenancy deposit which is not in a government authorised Tenancy Deposit Scheme?

If you answered yes, please contact us without delay at info@charlesfrenchlaw.co.uk for more specific and tailored advice regarding landlord’s obligations and the Tenancy Deposit Scheme.