Support, Advice and Experience within the Property Market

Deposits and prescribed information – are you breaking the law?

From Robert Ulph on February 7, 2015

This week I cover the subject of tenant deposits; I am aware that many landlords are unknowingly contravening the law with regards to the tenant deposit scheme. This is because landlords are not re-serving ‘prescribed information’ after an initial fixed term tenancy agreement has come to an end which then continues on a rolling month-to-month basis, as a periodic tenancy.

Landlords Not Aware of Law

Since the Superstrike v Rodrigues case and subsequent Court of Appeal judgement it has been well documented that all Assured Shorthold Tenancies (AST) with a deposit need to be registered with one of the three deposit schemes within 30 days of the deposit being taken. In addition, ‘prescribed information’ (general information about where the deposit is being kept) and guidance about the scheme should be given to the tenants and documented.

As an example, when a six month contract comes to an end, in the eyes of the law, the tenancy automatically rolls over and changes to a periodic tenancy and the prescribed information needs to be re-issued again. This must be done within 30 days of the end of the fixed term agreement and is a legal requirement (good letting agents will automatically do this for their landlords). Problems arise when landlords or their agents don’t know or remember that this has to be done at this time.

To avoid the complexities of this ruling, you could have a fixed term tenancy in place at all times, but there may be a cost associated in getting these drawn up at the end of each tenancy. Another option is to not take a deposit in the first place which means there is nothing to register or re-register at the end of the contractual term. This is not recommended as tenants have an obvious interest in looking after the property when there is a deposit at stake.

What can a landlord do if they have not re-registered the deposit at the end of a fixed term AST tenancy?

Will Oakes, Director of Attwells Solicitors confirmed “the only way to correct this is to return the deposit”, not an ideal solution but it will leave you completely free from prosecution from the courts; also without returning the deposit a Section 21 notice to gain possession of the property is not legal unless the deposit is properly protected and prescribed information served.

Summary

It is likely at some point that this piece of legislation will be amended by the courts and change the precedent set by the Superstrike judgement and clear up what is a very alarming and easily missed ruling. Until any changes have been made it is best practice to continue to re-serve the prescribed information at the end of a fixed term.

Should you wish to have an informal chat about this or any other letting issue please do not hesitate to call me or e-mail me – robert@pennington-online.co.uk

For further legal advice on the subject of deposits or any property related matters please do not hesitate to call Mr Oakes who is on hand to help. Attwells Solicitors can be contacted on 01473 229241