1. Tenancy Deposit Protection Philippa Graham 25.03.14

2. Deposit Protection Requirements

3. Section 213 Housing Act 2004 The Deposit Protection Requirements brought into force by the Housing Act 2004 apply to all Assured Shorthold Tenancies. Sections 212 to 215 of the 2004 Act as amended by the Localism Act 2011 require landlords to do the following: Protect the deposit with a tenancy deposit scheme within 30 days of having received the deposit Provide information to the tenant in a prescribed form within 30 days of having received the deposit There are three primary scheme providers:The Dispute Service (TDS); MyDeposits and the Deposit Protection Service. 3

4. Prescribed Information 4 What is it? Housing (Tenancy Deposits) (Prescribed Information) Order 2007 Exact requirements will depend on the scheme in which the deposit is protected Important to check both the Order and the Schemes requirements when checking whether a Landlord has complied Requirements are detailed so worth checking compliance, for example, must be signed by the landlord/agent and tenants should be given the opportunity to sign

5. Ayunnuga v Swindells 5 Remember Ayunnuga v Swindells (2012) CA (Civ) Landlord did not serve scheme leaflet Some PI was served though Landlord tried to argue that the main items were there and the tenant could find out the rest CA held that PI was a key part and must be provided in full - especially all the procedures for tenant to recover money

6. Relevance of Non compliance for tenants - financial 6 Financial penalties The penalties are fairly severe. Specified in section 214 of the Act.section 214 of the Act. If, at the time a tenant makes an application to the court, a landlord has not complied with any one of the requirements: ­then the court must order that the deposit is returned to the tenant or that it is paid into the custodial scheme. The court must also require the landlord to pay to the tenant a sum equivalent to between 1 to 3 times the tenancy deposit.

7. Relevance of non-compliance – preventing possession 7 Twofold: Any landlord who has not registered a deposit or who is in breach of the rules of a scheme is unable to give a tenant a valid notice under section 21 of the Housing Act 1988. They must return the deposit and/or comply with the requirements before doing so. If a landlord issues proceedings based on rent arrears under ground 8 of Schedule 2 to the Housing Act 1988, the tenant could defend and counterclaim on the basis that the tenancy deposit was not correctly protected. The tenant can claim up to 3 times the deposit and use this as an equitable set-off against the rent arrears claim, potentially defeating the landlord's right to possession.,

8. Case law

9. Rent in advance 9 Johnson v Old [2013] EWCA Civ 415. Court of Appeal decided that where tenancy agreement provided for a monthly rent of £1000 payable in advance in one payment of £6000, the tenant could not successfully argue that this payment was an unprotected deposit. The Court decided that on the facts the money was clearly paid as rent and not as a deposit Court questioned what tenant would say if asked to pay rent (again!) Does not mean that all rent in advance is not a deposit - each case must be considered separately

10. Superstrike Ltd v Rodriguues [2013] EWCA CIV 669 10 Superstrike Ltd v Rodrigues [2013] EWCA CIV 669 Landlord had granted an assured shorthold tenancy from 8 January 2007 and taken a deposit at that time (before the requirements of the Housing Act 2004 were in force) At the end of the fixed term of the tenancy, statutory periodic tenancy arose CA held that a new tenancy was created when the fixed term ended; the deposit was still held as security for the new tenancy; and therefore the landlord should have treated the deposit as if it had been paid again in respect of the new tenancy. The new tenancy had started after the deposit protection legislation had come into force so the deposit should have been protected before the landlord served the section 21 notice. The possession order was set aside as a result.

11. Superstrike Ltd v Rodriguues [2013] EWCA CIV 669 Ctd 11 What does this mean? Landlords must comply with all the deposit protection legislative requirements every time a new tenancy arises That means registering the deposit if this has not already been done, and serving the prescribed information even if the deposit was already protected and remained protected when the new tenancy arose. Failing to do either of these would leave a landlord open to a county court claim for a penalty of between 1 and 3 times the deposit. It would also prevent the service of a valid section 21 notice until the prescribed information has been served and the deposit either returned or protected.

12. Superstrike Ltd v Rodriguues [2013] EWCA CIV 669 Ctd 12 What should we look out for when advising tenants? Was the deposit protected within 30 days of receipt? Was the prescribed information served within 30 days (check requirements of the 2007 Order and particular scheme)? If statutory periodic tenancy arises – check these two points again at date of new tenancy Even if deposit remains protected when new tenancy arises – has the prescribed information been served again? If tenant facing possession proceedings – is the section 21 notice valid and can they counterclaim for the penalty payment? Likely that will be further developments in this area so watch out for new case law!

13. Philippa Graham 25.03.14