On the 14th June 2013 the Lord Justice Lloyd handled the appeal on the Superstrike v Rodriguez case. The outcome of this appeal has put the lettings world in turmoil for private landlords and letting agents, as well as all the Deposit Schemes who are still seeking legal advice. Online property forums are in full discussion as well as landlord governing bodies.
This particular case is because a tenant entered an Assured Shorthold Tenancy(AST) prior to April 2007, which meant the deposit did not have to be protected. The tenancy was for twelve months and expired in January 2008, it then proceeded into a statutory periodic tenancy(SPT). Now up to this point, this has been the procedure we have all been advised to do, the rules stated that only when you entered a new AST did you need to protect the deposit.
The case however, brings up rightly that when a tenancy is allowed to go into a SPT this is deemed as a new distinct tenancy and not a continuation and therefore the deposit should have been protected. And, because of this when the landlords took the tenants to court on a Section 21 notice, the court refused to recognise it.
The majority of landlords will have tenants in AST’s that started after April 2007, but if you have a tenant prior to this date and thought there was no need to protect, then my advice is to protect it now, as it would show your good intentions.
However, the dilemma now falls with periodic tenancies now being classed as new distinct tenancies and this is where problems may arise and why the deposit schemes are seeking legal advice because their own website clearly say you do not need to protect a deposit again if in a monthly rollover. And if each new month is a new distinct tenancy are we to renew monthly? What about guarantors who were on the original tenancy, do they not continue?
This is likely to go to the Supreme Court, so you can watch this space or put your tenants in a new tenancy and be covered.