The Housing Act 2004 (as amended by the Localism Act 2011 ) came into effect in April 2007. The Act requires a tenant’s deposit to be protected in an approved tenancy deposit scheme within 14 days of being received by the landlord. If the deposit is not protected the landlord must pay a fine and they will be prohibited from serving a section 21 notice on the tenant requiring possession of the property.
In the recent case of Superstrike Ltd v Rodrigues  EWCA Civ 669 the Court was asked to decide if a fixed term assured shorthold tenancy, which then became a statutory tenancy, was a brand new tenancy which triggered the requirement to protect the deposit.
Facts of the case
The landlord granted an assured shorthold tenancy to the tenant in January 2007 for a term of one year and at a rent of £606.66 per calendar month. A deposit of the same amount was paid by the tenant to the landlord. The deposit was not protected as the tenancy pre-dated the implementation of the Housing Act 2004.
At the expiry of the fixed term the tenant became entitled to a statutory tenancy on the same terms.
In June 2011 the landlord served a section 21 notice on the tenant. The tenant defended the notice on the grounds that the deposit should have been protected when the tenancy became a statutory periodic tenancy in January 2008.
The landlord was refused possession of the property because it was concluded that he had received a new deposit from the tenant in 2008. He had not protected this deposit, so service of the section 21 notice by the landlord in 2011 had no effect.
The case suggests that the only way a landlord who has failed to protect a deposit can serve a section 21 notice is by returning any deposit previously received to the tenant.
Commercial Property Department
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