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Deregulation Act and tenancy deposits: Is it really so simple now?

Recent cases like Superstrike v. Rodrigues or Spencer v. Taylor have demonstrated that statutes must be read carefully for what they actually state, not what they ought to state.

With that in mind, I took a close look at section 32 of the Deregulation Act, which creates a new section 215B in the Housing Act 2004 intended at removing the effects of the Superstrike case, namely the requirements to give the Prescribed Information to the tenant again, and to comply with the deposit scheme’s initial requirements, every time a replacement tenancy is created (including a statutory periodic AST).

The new section 215B states that, when a replacement tenancy is created the landlord will be deemed to have complied with these requirements if:

  • A deposit has been received on or after 6 April 2007,
  • the initial requirements of an authorised deposit scheme have been complied with in relation to the original tenancy,
  • the Prescribed Information in relation to the original tenancy have been given to the tenant within 30 days,
  • and…

There is a last and important condition, which I’ll quote verbatim:

when the new tenancy comes into being, the deposit continues to be held in connection with the new tenancy, in accordance with the same authorised scheme as when the requirements of section 213(5) and (6)(a) were last complied with by the landlord in relation to the deposit.

So there we have it: the deposit must continue to be held in accordance with the scheme, which in my view has to mean that any requirements imposed by the scheme in relation to the new tenancy have been complied with.

Therefore, the obligation to comply again with the scheme’s requirements is apparently unchanged.
Landlords should still ensure that they do whatever the scheme requires in such case, which might be nothing but might also be to notify the scheme or to fully ‘re-protect’ the deposit.

So much for deemed compliance.

That being said, this is not unreasonable as otherwise it would create a serious loophole: One could imagine a scenario whereby a deposit would no longer actually be protected while it would still be deemed protected by law…

Conclusion

In most cases section 215B does remove the requirement to give the Prescribed Information again every time a replacement tenancy is created.

However, it apparently does not change the position regarding the obligation to fulfill the scheme’s requirements, if any.

Therefore, whenever a new tenancy is created cautious landlords should continue to check the scheme’s requirements and to ensure that these requirements, if any, are complied with, at least until the dust settles and the wording of section 215B is clarified beyond doubt.

I haven’t read comments on this aspect yet (see articles by Nearly Legal and Tessa Shepperson).

“Protection” of tenancy deposits has always been to a large extent in the hands of the deposit schemes as the legal definition of the term is “compliance with the scheme’s initial requirements”.
As such, schemes can help landlords by allowing protection to continue without further action whenever a replacement tenancy is created. Some do operate that way and it would be positive if the others could follow suit in order to finally be able to “protect and forget”.

Edit:
More on this here