The De-Regulation Bill received Royal Assent on 26 March 2015. The De-Regulation Act 2015 is aimed, in part, at simplifying the rules relating to deposits paid in connection with Assured Shorthold Tenancies; an area that has become somewhat of a minefield for landlords and their agents over the years.
The law relating to tenancy deposits
The Housing Act 2004 created an obligation for landlords with tenancies created on or after 6 April 2007 to place their tenant's deposit into one of the government-backed tenancy deposit schemes ("TDS") and to furnish the tenant with certain prescribed information within 14 days of receipt.
The Localism Act 2011 amended the rules, including requiring landlords to protect deposits within a TDS and provide the prescribed information within 30 days of receipt instead of 14.
Most landlords and agents are aware of these requirements and the penalties for failing to adhere; a tenant can claim compensation of a sum between one and three times the deposit amount and a landlord cannot serve a notice seeking possession in accordance with section 21 of the Housing Act 1988.
There have been some recent cases that have made further changes to the law so that most landlords were unsure about when the obligation to protect their tenant's deposit arose. This confusion led to the creation of the Act which has reversed some of the ridiculous rules created by the case law.
The Act makes the following changes:
- Where you have a fixed term tenancy that was created before 6 April 2007, a deposit was taken before that date, and then a statutory periodic tenancy arose after 6 April 2007, a landlord must, if they have not already done so, protect the deposit within a TDS and serve the prescribed information within 90 days of the 26 March.
- Where a deposit is received by a landlord on or after 6 April 2007 and all requirements have been met in relation to protecting that deposit, and the tenancy is then renewed, the landlord will still be compliant if it simply leaves the deposit in the same scheme and does nothing. The landlord will not be required to re-protect the deposit or serve further prescribed information.
All landlords should consider whether to take steps to protect their tenant's deposits now. In addition to this, if landlords have an ongoing possession claim or a section 21 notice that may have been invalid before the Act, they should seek advice as to whether they will now be assisted by these changes. All of this must be carefully considered on a case by case basis.
Landlords should also be aware of further regulations implemented by the Act relating to the prevention of retaliatory evictions in the event that a tenant makes a complaint to their local authority about the condition of their property.