The recent legal judgment in 'Superstrike v Rodrigues' in respect of tenancy deposit protection has caused widespread consternation within the residential landlord community.
This landmark case concerns a landlord who took a deposit from a tenant before the tenancy deposit regulations came into force in April 2007 and where the fixed term subsequently expired after that date. The landlord did not protect the deposit as he did not know that this was required.
At the Court of Appeal it was decided that the landlord was at fault and had failed to protect the deposit, so the court awarded judgment against the landlord and for the tenant.
There were two reasons given for the Appeal Court decision:
- The periodic tenancy which arises under s5 of the Housing Act 1988 at the end of a fixed term where the tenant stays on is in fact a new tenancy (although lawyers had long been aware of this).
- The deposit would be treated as having been paid back to the tenant and repaid to the landlord at that stage, meaning that the deposit then needed to be protected.
According to housing law specialist solicitor Tessa Shepperson, the Appeal Court's second finding is the real problem, as it could be interpreted that all other deposits paid to landlords (or to their agents) need to be re-protected and that the prescribed information should be re-served in cases where tenants stay on after the fixed term ends and the tenancy is then defined as being 'statutory periodic'.
This judgment potentially leaves many thousands of landlords who believed that they had acted correctly in respect of deposit regulation being at risk of future claims from their tenants which might then result in court penalties and costs.