New law: Landlords must comply with new tenants' deposit protection laws by 23 June or risk losing vital rights
Landlords should immediately review the deposits they are holding to determine whether they are protected under new tenant protection laws, or risk losing vital rights against some tenants.
From April 2007, landlords of assured shorthold tenancies (ASTs) have been required to protect the tenant's deposit using an approved tenancy deposit scheme, and give the tenant 'prescribed information' about the scheme within 30 days after receiving the deposit. Failure to do so means (1) landlords may have to pay a financial penalty of up to three times the deposit to the tenant at the end of the tenancy, and (2) the landlord is not allowed to give the notice he would otherwise be able to give in order to recover the property from the tenant.
Several anomalies that arose under the 2007 rules have now been resolved by new laws now in force, as follows:
- If a landlord is still holding a deposit made under an AST granted before 6 April 2007, and which also expired before 6 April 2007 (and therefore converted automatically to a statutory periodic tenancy from that date), and the landlord has never protected the deposit or given the prescribed particulars, the landlord does not have to protect the deposit or give the prescribed information to the tenant immediately, but will not be allowed to give notice to recover the property unless and until it does both. However, no financial penalties will be imposed.
- If a landlord:
- is holding a deposit under an AST granted before 6 April 2007; and
- the AST has expired, but did not expire until after 6 April 2007; and
- it was either renewed or became an automatic periodic tenancy from after that date, without the deposit being protected or the prescribed information given
it must protect the deposit and give the prescribed information by 23 June 2015 (or earlier if a court is already considering possession proceedings or proceedings for failure to protect a deposit), or it will be unable to give notice to a tenant to recover the property, and will face financial penalties.
- If a landlord took a deposit under an AST on or after 6 April 2007, protected it and gave the tenant the necessary prescribed information, the courts have said that the landlord must repeat the process when the AST ends and is either renewed or automatically becomes a periodic tenancy. However, the landlord no longer has to repeat the process, provided the landlord, tenant, property and scheme being used to protect the deposit remain the same at the time of the renewal or automatic conversion to a periodic tenancy.
- Landlords should immediately review the deposits they are holding against ASTs and periodic tenancies in order to determine when the deposits were taken, whether the relevant tenancies are ASTs or have converted to periodic tenancies, and whether the 23 June deadline applies.