Can the landlord rely on his original prescribed information if the deposit has subsequently become unprotected?

Here is a question to the blog clinic from Will who is a tenant.

I am a tenant trying to get back the deposit. I guess no one has encountered my situation before as it is quite up-to-date and I can’t find enough convincing information online.

I moved out last month this year from a property I initially rented in September 2013.

Upon renting, the landlord handled my deposit with mydeposits.co.uk and served me the prescribed information within 30 days. However the end date was wrong in the certificate, making the AST 10 months instead of 12 months on the contract. I noticed but signed the certificate anyway as I was renting for the first time and not sure about everything. Moreover, at that time, the certificate said the deposit would be kept protected till three months after my left.

Then mydeposits changed their rules and introduced something called auto-unproctect (this information was communicated to landlords only) in winter 2013 (see here), which left deposits unprotected one month after the end of AST.

11 months later, when I received the letter from mydeposits officially telling me that the deposit became unprotected, I sent an email to the landlord asking to update the status since I was still renting. However the reply I got was that there was nothing wrong with the end date on the deposit certificate and no action was taken (btw, mydeposits claimed they sent several emails to landlords informing the new rule and asking for action before deadlines).

Later I renewed my contract (tenants, landlord, property remained the same) with the landlord for another year starting September 2014 with a break clause. The deposit, presumably, was unprotected for nearly two months before the landlord put it back into mydeposits within 30 days of the start of the new tenancy. This time, however, the prescribed information was served late in November 2014 and was incomplete.

I know under the Deregulation Act 2015, the landlord is no longer required to re-serve the notice under certain circumstances. My question is that how does the act apply to my case?

To be more specific, how does Section 32, 215B 1(b) & 1(f) apply, since the landlord failed to comply with mydeposits’ requirements (though which may not be among the initial ones) to update my tenancy status and left a roughly two months gap of unprotected deposit in-between?

Am I able to argue that the deposit wasn’t ‘continues to be held’ in mydeposits by the time the new tenancy ‘comes into being’ until it was re-protected weeks later?

Answer

After the Deregulation Act amendments, there is considerably more statute to wade through!

Here you paid your deposit in respect of your first fixed term tenancy and this was dealt with properly, save that due to an error in the notice, the deposit was unprotected for the last two months of that tenancy.

If a new tenancy fixed term is then given to the tenant, how do the new rules apply if the landlord fails to serve the second prescribed information correctly?

The Law

It’s probably best to set out the section in full here:

215B Shorthold tenancies: deposit received on or after 6 April 2007
(1) This section applies where—

(a) on or after 6 April 2007, a tenancy deposit has been received by a landlord in connection with a shorthold tenancy (“the original tenancy”),
(b) the initial requirements of an authorised scheme have been complied with by the landlord in relation to the deposit (ignoring any requirement to take particular steps within any specified period),
(c) the requirements of section 213(5) and (6)(a) have been complied with by the landlord in relation to the deposit when it is held in connection with the original tenancy (ignoring any deemed compliance under section 215A(4)), [this refers to the service of the prescribed information]
(d) a new shorthold tenancy comes into being on the coming to an end of the original tenancy or a tenancy that replaces the original tenancy (directly or indirectly),
(e) the new tenancy replaces the original tenancy (directly or indirectly), and
(f) when the new tenancy comes into being, the deposit continues to be held in connection with the new tenancy, in accordance with the same authorised scheme as when the requirements of section 213(5) and (6)(a) were last complied with by the landlord in relation to the deposit.

(2) In their application to the new tenancy, the requirements of section 213(3), (5) and (6) are treated as if they had been complied with by the landlord in relation to the deposit.

Analysis of the law

Section 215B(1) is setting out the prerequisites for section 215(2) to apply to the deposit. Section 215B(2) is the section which says that the landlord does not have to re-serve the prescribed information.

Looking at these insofar as your tenancy deposit is concerned:

With respect to (1)(b) The rules refer to the ‘initial requirements of an authorised scheme. You can see the MyDeposits terms here and the rules that apply (assuming this was not a joint tenancy) are those set out in section C1.

I can’t see anything about protecting the deposit for the right length of time here. Section C1.7 which is where the member (ie the landlord) makes an administrative mistake says that they ‘may’ request changes to the deposit protection. Not ‘must’ or ‘should’.

Which implies that the landlord is not in breach if he does not request amendments for an administrative mistake (as in your case).

So it looks as if section (1)(b) has been complied with. As has (c).

Looking at (f)  – this sets out the condition that

when the new tenancy comes into being, the deposit continues to be held in connection with the new tenancy, in accordance with the same authorised scheme as when the requirements of section 213(5) and (6)(a) were last complied with by the landlord in relation to the deposit.

This is the nub of the problem.  As you rightly point out, the section talks about ‘continues to be held’.  Which could imply that the deposit must have been protected continuously.

However, it then talks about the same scheme as when the requirements were ‘last complied with’ by the landlord.  Where I think the landlord, in this case, would satisfy the section.

How is this section to be interpreted?

Conclusion

The answer?  Frankly I don’t know.  It is one of those things which will have to be tested in the courts.

My feeling however, is that as you have not been prejudiced and the deposit is once again protected, the courts will lean towards the argument on the side of the landlord.

The view of the court would probably be affected, however, on the context under the point was raised.

If, for example, you were claiming the penalty of between 1x and 3x the deposit sum for failure to comply with the  regulations – my feeling is that the court would not be sympathetic to you.

If on the other hand, your landlord was looking to evict you under section 21, and you were using this in the context of a defence (ie it would be being used as a ‘shield rather than as a sword’), then the court might be more sympathetic towards your argument.

It is certainly an argument that a Judge would listen to and it is likely that if it were raised, the case would be adjourned to a second hearing – putting off the evil day and giving you more time in the property!

Incidentally, if I were advising the landlord in this situation, I would recommend that a new, correct, form of prescribed information be served before service of the section 21 notice on a ‘belt and braces’ basis.

Overall I think the landlord is probably in the clear.  But it is by no means certain.  A warning to all landlords to be careful!

What do others make of this? Do you agree with my analysis?