The DCLG has published the text of the Government amendment to the Deregulation Bill that is proposed to deal with tenancy deposits and specifically the Superstrike position of a new tenancy (and requirement to re-protect the deposit and re-serve the prescribed information) arising when a fixed term ends and a statutory period tenancy begins.
The text of the amendment – a new S.215A to the Housing Act 2004 – is below.
Briefly, the effect appears to be to provide that a deposit shall not be deemed to be paid or received in respect of a statutory periodic tenancy arising. Once it is in force, there will be no need to re-protect the deposit or re-serve the prescribed information.
This will also apply to any previous move from fixed term to statutory periodic where the issue has not yet been decided in proceedings, at least by the date it is in force – “shall always be deemed to apply [...] whenever it was paid or received”. This is not quite full retrospectivity, but means after the provision is in force, the court shall treat any past fixed term to statutory periodic change accordingly.
The other significant element is that any deposit taken prior to the Housing Act 2004 provisions coming into force in April 2007 before the Housing Act 2004 provisions came into force, which is not yet protected, must be protected within 3 months of this provision coming into force. This is a useful sweeping up, meaning that after the 3 months, all deposits that have taken for an AST, whenever they were taken and no matter how long ago, must be protected and prescribed information served.
The amendment look like it should work at first sight. But, a few points:
This will only apply to fixed term to statutory periodic tenancies. It does not, categorically not, apply to ‘renewal’ tenancies for a fresh fixed term. The deposit will need to be re-protected and the prescribed information served within 30 days for those, even if the landlord/agent just keeps hold of the same deposit.
This does not apply until the bill is passed and the provision is in force. Until then, Superstrike remains valid in operation and not re-serving the prescribed information on a statutory periodic arising means that no section 21 can be served. While this will change once the provision is in force, any possession claim issued before that on an invalid s.21 should still fail.
There is a big question whether the provision would retrospectively validate a purported s.21 notice served (where the prescribed information was not reserved in time) before it came into force.
Those advising both landlords and tenants should look at all of this very carefully.
The clock is ticking on Superstrike defences to possession, and s.214 claims. But I suspect that, as with the Localism Act amends in 2012 and the requirement for all post April 2007 deposits to be protected within one month, there will be a lot of landlords and indeed agents who get caught out by the 3 month provision here. There may not be that many pre-2007 deposits around, but the numbers are not insignificant.
The text of the amendment:
(1) The Housing Act 2004 is amended as follows.
(2) In section 215, paragraph (5), at end insert—
“Shorthold tenancy deposit: further requirements
215A
(1) A tenancy deposit shall not be treated as being paid or received in connection with a shorthold tenancy by reason only of the deemed grant of a statutory periodic tenancy pursuant to the provisions of section 5(1) of the Housing Act 1988 (“the 1988 Act”).(2) Subsection (1) shall apply (and shall always be deemed to apply) in respect of any tenancy deposit whenever it was paid or receive whether before or after the coming into force of sections 212 to 215 of the Housing Act 2004 (“the 2004 Act”).
(3) Where—
(a) a tenancy deposit has been received in relation to a shorthold tenancy under a tenancy (“the original tenancy”);(b) the original tenancy was granted as a fixed term tenancy;
(c) the original tenancy commenced before 6 April 2007;
(d) immediately upon the expiry of the fixed term of the original tenancy a statutory periodic tenancy was deemed to be granted pursuant to section 5(1) of the 1988 Act;
(e) the initial requirements (as defined by section 213(4) of the 2004 Act) have not been complied with in respect of that tenancy deposit; and
(f) no event has occurred on or after 6 April 2007 which would otherwise require that tenancy deposit is to be protected in accordance with an authorised scheme under section 213 of the 2004 Act the provisions of subsection (4) shall apply to that tenancy deposit.
(4) The initial requirements under section 213(4) of the 2004 Act and the requirements of section 213(6) of that Act (relating to prescribed information) must be complied with in respect of any tenancy deposit referred to in subsection (3) within 3 months of the date when the provisions of this Act come into force.
(5) The expressions “tenancy deposit” and “shorthold tenancy” in this section shall have the same meanings as for the purposes of sections 212 to 215 of the 2004 Act.”.’.
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