Providers need to be alive to the risk of contractors becoming insolvent and how to limit the resulting inevitable disruption.
Statutory regulation of tenancy deposits was introduced in April 2007 under the Housing Act 2004 (“the Act”). s.213 of the Act placed an obligation on landlords to pay their tenant’s deposits into an authorised scheme.
But what about those deposits which were paid by tenants before April 2007?
In this recent case [Michalis Charalambous (1) & Katerina Karali (2) V (1) Maureen Rosairie Ng (1) Kok Ho Ng (2) (2014)], the tenant paid a deposit in 2002 after taking a one year tenancy. The tenancy was renewed twice and when the last tenancy ended in 2005, a periodic tenancy arose under the 1988 Act. The landlord did not pay the tenant’s deposit into an authorised scheme at any stage. In 2012, the landlord served a Section 21 Notice on the tenant.
The Court of Appeal held that the landlord’s Section 21 Notice was invalid because the tenant's deposit had not been paid into an authorised scheme as required by the Act, regardless of the fact that when the deposit was paid in 2002, there was then no requirement to pay it into a scheme.
It was held that s.215(1)(a) of the Act, which prevents a landlord from serving a notice under s.21 of the 1988 Act whilst a deposit is unprotected, applied.
The lesson to learn is that the landlord could have served a valid Section 21 Notice by either paying the deposit into an authorised scheme, or by repaying the deposit to the tenant.
In view of this recent decision, landlords must audit older tenancies to carefully consider how they are managing their tenant’s deposits. If not paid into an authorised scheme, do so now. Otherwise your hands will be tied if you need to seek possession.
For more information
For more information on deposits and authorised schemes generally, please contact any member of our housing litigation team via 0121 212 7400.
Housing associations must continue to deliver core functions effectively and compliantly notwithstanding the uncertainty over the standards to which you will be held in the future.
Over the last few years the meaning of “asset management” has changed from being all about repairs to understanding that assets might not stay in an organisation forever.
The Grenfell Tower tragedy has understandably prompted a fundamental reconsideration of how building safety is approached for High-Rise Residential Buildings.
Results from the latest three-yearly valuation of the Local Government Pension Scheme (LGPS) are starting to trickle through.
The potential for Brexit with or without a deal causes uncertainty, and credit rating agencies do not like uncertainty.
Let’s face it, Wills are underappreciated and often overlooked. In fact, around 54% of the British public do not have one!
A recent case throws light on the scope of the exemption for “land transactions” from the need for an OJEU tender process.
A leaked report into maternity services at the Shrewsbury and Telford Hospitals NHS Trust revealed by The Independent has been described as the “largest maternity scandal in NHS history”.
The Pensions Regulator is showing its determination to improve the prudent management of Local Government Pension funds by digging deep into the internal workings of these funds.
To receive invitations to our events, as well as information and articles on legal issues and sector developments that are of interest to you, please sign up to Newsroom.