As reported by Landlord Today a new ruling could see many landlords facing legal action.
A Court of Appeal judgement could have major consequences for landlords, opening them up to legal action from tenants because they unwittingly broke the law on tenancy deposit protection.
They did not protect deposits at the time because they did not have to, and therefore did nothing wrong. The law on compulsory protection had not been brought in. However, if the tenant remained in place and the tenancy became periodic, landlords will have broken the law by not protecting the deposit.
Landlords may also have broken the law as recently as 30 days ago by not re-protecting deposits when the initial fixed term tenancy became periodic. This comes as a result of a ruling last Friday in Superstrike Ltd v Marino Rodrigues, where the tenant stayed on after tenancy deposit law became mandatory on April 6, 2007. The tenancy became periodic and, at that point, the landlord should have protected the deposit, it has been ruled.
Broadly, the Court of Appeal has now held that a statutory period tenancy is not a continuation of a fixed term tenancy but a new tenancy. This means that deposits which have been paid by a tenant must be re-protected each time a fixed tenancy ends and within 30 days of the new statutory periodic tenancy being created.
The greater concern for landlords and agents is that many, including those with ongoing tenancies, will not have re-protected deposits, and not have given the tenants a new deposit protection certificate plus the prescribed information.
The case’s full implications are still being studied by lawyers – and by the tenancy deposit schemes whose rules differ and may now have to be rewritten. Central to the judgement is that tenants whose deposits were not re-protected when their fixed term tenancy rolled over into a statutory periodic tenancy, may now be able to claim against their landlord. Tenants could argue that any eviction was unlawful, and may also be able to claim back their original deposits plus a penalty.
The Statute of Limitation means that tenants of up to six years ago could make claims. The Superstrike Ltd v Marino Rodrigues case was heard last month and the decision handed down on Friday.
While the full legal implications are still being scrutinised, what is clear is that the court has said that at the end of a fixed term tenancy, if a new fixed term tenancy is not put in place and the tenancy becomes a statutory periodic tenancy, this becomes a new tenancy.
Until now, it was widely assumed that a statutory periodic tenancy was simply a continuation of a fixed term tenancy, with no need to treat it as a new tenancy for the purposes of tenancy deposit protection.
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News feed from: http://www.landlordtoday.co.uk/news_features/Thousands-of-landlords-couldface-legal-action-after-new-Court-of-Appeal-ruling
