Solicitor David Smith reports on the changes on tenancy deposit law coming very soon in the Deregulation Bill
Note – the Deregulation Act has now received the Royal Assent so the new rules discussed below are now law
In February the House of Lords passed the Deregulation Bill and this is now just waiting to receive the Royal Assent.
This must happen before the end of March so it could be any day now.
Unusually, the provisions relating to tenancy deposits will come into effect immediately. This is good news for landlords, as it will wipe out the issues which arose following the case of Superstrike.
Here is a summary of the main changes:
- Any deposits taken before April 2007 where the tenancy has become periodic after that date, must be protected and the prescribed information must be served within 90 days. At which point the deposit will be treated as if it had always been protected.
- Any deposits taken after April 2007 that were protected with the prescribed information have been served at some stage during the initial tenancy, will be treated as if the prescribed information had been served on every renewal or whenever a statutory periodic tenancy arose.
- Any deposits taken before April 2007 which became periodic before that date must be protected or the money returned to the tenant (or the person who paid it) before a s21 notice can be served. Landlords will not be liable for any financial penalty for non protection.
- The prescribed information rules are amended to allow for agents details to be given instead of landlords details where the agent is dealing with the deposit.
- The 90 day period is a chance for all landlords and letting agents to regularise the situation regarding their pre April 2007 deposits.
If you are a landlord or a letting agent, you should check all your properties NOW.
Make sure that all pre April 2007 deposits which went periodic after that date (in respect of assured shorthold tenancies) are properly protected and the prescribed information served, before the end of this period.
This is a final chance to regularise situations where deposits have not been protected or the prescribed information served.
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Interestingly, the obligation to protect all deposits along with a grace period was already created by the Localism Act.
So this is the second chance, with a second, longer, grace period.
“This is a final chance to regularise situations”
Well, until the third one ;-)
@Romain I know, i thought that when I wrote it!
Last time was the ‘last chance’ too. Hopefully they have now sorted everything but I would not be surprised if we had another issue crop up.
I wonder how the agent liability will work out in practice as often there are disputes between landlords and agents about exactly who was dealing with it, leaving the tenant trapped in the middle
Te4ssa
David has omitted to confirm one variation, the post 2007 AST where the deposit has still not been either insured or sent to DPS
Presumably you now should do one or the other (and serve PI if a complete mess) but has an offence been committed and a s213 claim possible.
I assume not as the way this has been done is to rewrite the Law as if it had been as it is going to be now but from 2007. Therefore if you sort the money within the 90 days you have complied with the initial requirements within the 90 day amnesty and as if you had done it correctly originally?
You might note the 90 day period is mentioned in the new section 215A. This say it only applies to deposits originally taken before April 2007 and it went statutory periodic after April 2007 (literally a Superstrike decision).
If you moved a tenant in, in 2010 and did not do deposit compliance correctly, this 90 days has no relevance.
Is this not the way the legislation is written?
@David, yes that is correct, and I have amended the post to make this clear. Thank you.