Statutory Periodic Tenancies Tenancy Deposit Protection Schemes

Many landlords were extremely worried when the results of Superstrike Ltd vs. Marino Rodrigues recently became known following Lord Justice Lloyd’s judgement on 14th June 2013. Initially, it appeared that any assured shorthold tenancy with a deposit properly protected which converted to a Statutory Periodic Tenancy, should have the deposit re-protected. To landlords, many of whom feel as though they are already drowning in bureaucracy, this seemed a step too far, particularly with the implications that a deposit not fully protected could create problems with evictions using a section 21 notice.

Fortunately, when the full details were shared it did not seem quite as serious for all landlords as it had on first reading. The original tenancy in the case had been a 1 year tenancy, starting in January 2007, just before the Tenancy Deposit Protection legislation came into force in April of that year. There was no means to protect the deposit and legislation was not retrospective, so all was well from that side. However, in January 2008, it converted to a Statutory Periodic Tenancy and that conversion actually started a new tenancy. There does seem to be some logic there, as had a new assured shorthold tenancy been issued, the deposit should have been protected. The judgement was therefore that a new tenancy had commenced in January 2008 and as it was not protected, it was invalid to issue a section 21 notice in June 2011. This seems rather unfair, as clearly the tenant took action against the landlord who had allowed the tenancy to run over 4 years without change or rent increase.

So only those landlords who have long-standing tenancies dating prior to April 2007 where a deposit is being held, need to worry! Their answer is to return the deposit or protect it immediately. This may not protect landlords from penalties, but at least it shows an intention to comply with the legislation, albeit a little late; if it did get to Court, this could be viewed more favourably than deliberate failure to protect.

Where tenancies were issued after
6 April 2007 and had the deposits properly protected, there is no requirement to re-protect deposits when a tenancy becomes periodic. Where a new tenancy agreement is signed, because the rent has risen or perhaps because the tenant wants additional security, then it should be re-protected. There had been some suggestion that those landlords who have tenancies that have converted to Statutory Periodic Tenancies, should contact the relevant deposit protection scheme to advice of the status of their tenancies. A conversation with the Tenancy Deposit Scheme representative at the Landlord and Lettings Show in Bolton last week was quite clear – no need for any contact, provided the deposit is properly protected, though the other schemes may decide to make contact themselves to check status.

Landlords are strongly recommended to join a landlord association and get whatever advice and information they can. They are increasingly under threat from governments, who do not understand the pressures that private sector landlords are under and campaigns from Shelter and CAB who are constantly seeing the landlord as the ‘baddie’, creating a victim out of the vulnerable tenant. Get the help that is available and ask the questions – it is the only way of avoiding the ‘bad landlord’ epithet so beloved of the media.

Residential Landlord promotes an alternative to the govenment deposit schemes, full details of which can be found via the link below.