We use cookies to improve our site and your experience. By continuing to browse on this website you accept the use of cookies. Read more...

Tenancy deposits and statutory periodic tenancies

When a fixed-term AST ends, any subsequent statutory periodic tenancy is a new tenancy (s.5(2) Housing Act 1988). What does this mean for tenancy deposits?

In Superstrike Ltd v Rodrigues [2013] EWCA Civ 669, premises were let on an AST in January 2007 (‘the old tenancy’); a deposit was paid.  In April 2007, the tenancy deposit provisions in the Housing Act 2004 came into effect.  In January 2008, the tenant remained in possession under a statutory periodic tenancy (‘the new tenancy’).  The landlord continued to hold the deposit.  It subsequently served a s.21 notice, but the tenant resisted the possession order on the basis of s.215(1) of the 2004 Act: when the notice was given, the deposit was not protected.

The Court of Appeal, in a successful second appeal, agreed.  It held that:

  1. the deposit was held as security for the performance of obligations under the new tenancy, not the old tenancy;
  2. the tenant should be treated as having paid the deposit to the landlord in respect of the new tenancy, by way of set-off against the landlord’s obligation to account to the tenant for the deposit in respect of the old tenancy; and
  3. this amounted to a payment by the tenant in January 2008, and the landlord’s retention of the deposit amounted to receipt on that date.

The landlord was therefore under the obligations in s.213 of the 2004 Act; and, not having protected the deposit, he was barred by s.215 from serving a s.21 notice.  It appeared that the only way the landlord could retrieve the position was by returning the deposit to the tenant.

The effects of this decision go far wider than just those tenancies which began before April 2007 but became periodic after.  Whenever a fixed term ends and a statutory periodic tenancy begins, a new deposit is deemed to have been paid, and all the requirements of s.213 should be complied with.  How to comply with the initial requirements of a scheme when the deposit is already protected is unclear; we are told that an announcement will be made by the three deposit schemes in due course.  But in the meantime, cautious landlords will be re-serving the prescribed information on tenants with statutory periodic tenancies.

David Willink / 1st Jul 2013


Disclaimer

The information and any commentary on the law contained on this web site is provided free of charge for information purposes only. Every reasonable effort is made to make the information and commentary accurate and up to date, but no responsibility for its accuracy and correctness, or for any consequences of relying on it, is assumed by any member of Chambers. The information and commentary does not, and is not intended to, amount to legal advice to any person on a specific case or matter. You are strongly advised to obtain specific, personal advice from a lawyer about your case or matter and not to rely on the information or comments on this site. No responsibility is accepted for the content or accuracy of linked sites.


Download as PDF


Back to News