Most landlords will be familiar with the requirements to protect deposits taken for Assured Shorthold Tenancies, which has been a requirement since 6th April 2007.
The landlord must within 30 days of receiving a deposit for an Assured Shorthold Tenancy place it into a protected authorised scheme AND give the tenant information about the deposit and the protected scheme.
There has been much talk about these deposits and the Notice since the recent case of Gardner v McCusker heard in Birmingham County Court in May 2014.
The original tenancy was a fixed term Assured Shorthold Tenancy Agreement which commenced in 2009 and the landlord complied with the requirements concerning protecting the deposit, placing it in an approved scheme, and provided the tenant with the prescribed information. However, the fixed term period of the Tenancy ended in May 2010, but the tenancy continued with the same terms as a periodic tenancy, technically a new tenancy.
It was held by the County Court that although the deposit could remain in the existing scheme, the landlord was obliged to provide the tenant with a fresh Notice providing the prescribed information.
Failure to comply with this has two serious consequences for the landlord. Firstly, the landlord may be required to pay a fine of between one and three times the amount of the deposit, and further, the landlord can’t end the tenancy by serving a Section 21 Notice on the tenant, or if he does so it will be held to be invalid.
Although this was only a County Court decision and doesn’t bind other County Courts, landlords should, to protect their position, provide the tenant with the prescribed information when a fixed term tenancy comes to an end that the tenancy runs over into a periodic tenancy.
Failure to do so could be costly!