Landlords
granting Assured Shorthold Tenancies (‘AST’) have received another blow from
the Court of Appeal in their decision Superstrike Limited v Marino Rodrigues.
The case
concerned an AST entered into before the tenancy deposit requirements of the
Housing Act 2004 came into force in April 2007. The original fixed term
tenancy in this case was entered into before April 2007. The fixed term
of the tenancy ended in January 2008 and the AST continued as a statutory
periodic tenancy. In June 2011 the landlord served a notice under section
21 of the Housing Act 1988 requiring possession of the property. The
issue for the Court of Appeal was whether the landlord was entitled to do so
despite the non-registration of the tenant’s deposit.
The tenant
argued that on expiry of the fixed term a new and distinct statutory tenancy
came into force pursuant to the 1988 Act and the deposit should have been
protected within 14 days of that date. The Court of Appeal agreed,
holding that if the parties had been aware of the legal consequence upon the
expiry of the fixed term, they were likely to have agreed that the landlord
should continue to hold the deposit to protect against any tenant breaches
during the continuation tenancy. On that analysis, the tenant had paid
and the landlord had received a deposit in respect of the new tenancy in
January 2008. Consequently, when the landlord served the section 21
notice, it was in breach of the 2004 Act and was not entitled to a possession
order.
This case
serves as a warning that landlords will not be immune from the tenancy deposit
rules even when an AST was granted before the relevant legislation came into
force. Given the average length of most ASTs, this issue should not arise
often but where it does the landlord will need to analyse the relevant sequence
of events carefully before serving a section 21 notice.
by Freddie Jackson, Solicitor