There has been much speculation since the Court of Appeal handed down its judgment in Superstrike Ltd v Rodrigues, but the initial widespread concern about the impact of the judgment has not yet been felt. Until the decision is tested further, its effect is limited and we should perhaps look beyond the rather unusual facts in that particular case to the statutory provisions that were at the heart of the decision.

The protection afforded to tenants paying deposits to a landlord has been in place since the Housing Act 2004 came into force. However, it is the tightening up of those provisions through the Localism Act 2011 which seems to have passed somewhat under the radar.

When a landlord receives a deposit in connection with an assured shorthold tenancy he must, within 30 days of the date it is received, comply with the initial requirements of an authorised scheme and send the tenant the prescribed information. The initial requirements of an authorised scheme will depend on the particular scheme the landlord contracts with, but in Vision Enterprises Ltd v Tiensia the Court of Appeal used the generic description of “taking steps to protect the deposit”. The Prescribed Information required to be given to the Tenant is set out in the Housing (Tenancy Deposits)(Prescribed Information) Order 2007 and this must be provided within 30 days of the deposit being received by the landlord. Landlords can find themselves in difficulty by assuming this will be done by the TDS, but this often not the case.

If a landlord fails to protect the deposit or provide the prescribed information within 30 days then it is not able to serve notice pursuant to section 21(4)(a) Housing Act 1988. This will leave a landlord with severely restricted options for bringing the tenancy to an end.

If notice cannot be served under another ground, the landlord’s only real option is to return the deposit in full (unless the tenant will agree to any deductions,) so that it can then serve a section 21 notice. It may be possible to save the situation if the deposit was protected within 30 days, but the prescribed information was not sent in time. In those circumstances, it is still possible to serve a section 21 notice, but only after the Prescribed Information has been provided to the tenant. It is not yet clear whether a section 21 notice will stand if the deposit has been protected out of time and cannot be returned, because for example it is in a DPS. Under the strict wording of the act, the notice cannot be served, but this would leave landlords in an impossible situation, which the Courts seem to have recognised.

Even if the landlord returns the deposit or serves the Prescribed Information late, it may still be liable for a financial penalty.
If a section 21 notice is served where the landlord has lost the right to do so, it will be invalid and possession will not be granted by the Court. The Landlord will then have to remedy the position and give a fresh notice if it wishes to continue in its pursuit for possession.

Mistakes in notices can lead to lengthy delays and unexpected costs for landlords so we advise landlords to contact a specialist solicitor to deal with possession issues. At OTB Eveling we offer a competitive fixed fee pricing structure for service of notices and other residential lease management work. For more information, please contact Michael Clark, OTB Eveling’s specialist property litigator.