The Deregulation Act 2015 & Tenancy Deposits

 

The Deregulation Bill received Royal Assent on 26^th march this year and became The Deregulation Act 2015.

This Act contains important changes to deposit legislation which hopes to clarify the headcahes created  by the court cases of Superstrike vs Rodrigues and Charalambous vs Ng.

 A brief reminder of the cases

In Superstrike vs Rodrigues the judgement stated that a statutory period tenancy which arose after the fixed term had ended, should be seen as a ‘new’ tenancy and ruled that a deposit taken on Tenancy agreements entered into  before the Tenancy law was in place on 6 April 2007 and which then either renewed or continued as a periodic tenancy should have been protected (or re-protected) with the up to date prescribed information (PI) served on the tenant.

In Charolambous vs Ng the judgement stated that even though a deposit was taken before tenancy legislation on 6th April 2007, because it had not been protected and PI served, a Section 21 notice served on the tenant was invalid.

So what had  the Deregulation Act 2015 put in place?

1.If you took a deposit on any Assured Shorthold Tenancy (AST) before April 2007 and have not protected it.

You must protect the deposit and serve Prescribed Information by 23rd June 2015, otherwise you will not be able to issue a Section 21 notice at any point in the future.

However, it’s important to note that there are no penalties for any landlords who don’t protect deposits in these circumstances. This effectively confirms the decision in Charalambous vs Ng.

 2.If you took a deposit on a tenancy after  6 April 2007 and protected and served the PI, and the tenancy has since either rolled into a periodic or been renewed, then as long as the deposit is still protected in the same scheme and the tenancy details have not changed you will be deemed to have complied. In other words, this specific change overturns Superstrike vs Rodrigues judgement.

 3.If you took a deposit on an AST before April 2007 and the AST subsequently rolled into a Periodic or was renewed after April 2007, then the deposit must be protected and PI served by 23rd June 2015. You will not be able to serve a Section 21 notice and WILL be liable for penalties for non-compliance until you’ve protected the deposit.

 4.The final change (which isn't in relation to Superstirke or Charlambous) allows the agent’s details to be used on the PI where they have taken and protected the deposit on the landlord’s behalf. Previously there was doubt as to whether the agent’s details could be provided instead of the landlord’s when the agent took the deposit and protected it on the landlord’s behalf.

Why is Private renting such a dirty word?

On a daily basis I advice people on their housing situations and the options available to them
Most people are couples living with the in-laws overcrowding a house that really isn't made for 2 couples and the kids

When advising people of their options I must give all information both good and bad
Even now I am still surprised at the amount of people who still immediately disregard the option if private renting
Most say they can't afford it without even taking the time to look into local market prices, the others are scared by media horror stories of rogue landlords terrorising tenants and not allowing them to live in a property as their home

Yes, I admit the upfront money required to rent is a big hurdle, 1st months rent, 6 week deposit and letting agent fees and you are suddenly laying out the wrong side of £3k
And yes, you do have the worry of being asked to leave hanging over your head
BUT on the plus side of private renting you can chose exactly where you wish to live, rent a property within your own budget and if something goes wrong such as the boiler, you pick up the phone and its sorted
There are more and more products coming onto the market to help people to access private rented as a viable long term option
Many local council have renting incentive schemes which will help with the financial burden and pay rent and deposits
If you are employed you can now get a deposit bond for a minimal fee which covers the length of the tenancy for the full amount of the deposit but for as little as £60 up front

Most people still have the general belief that getting a council house is easy and the answer to everything for long term hassle free living
But the reality since the Localism Act 2011 is very different, councils overhauled their allocation policies meaning it is harder to get a property, and once you have a council property you will more than likely be given a 1 yr introductory tenancy, after which you can be quickly evicted if you have breached the terms, if you are not evicted you will probably be issued a flexible tenancy with a maximum term of 5yrs, there are no more life time tenancies and if your children have fled the nest by the time 5 yes is up, councils have every right not to renew your tenancy and downsize you

The security that used to come with a local authority property no longer exists, with this in mind the sensible thing to do would be to streamline the private rental sector to make it more attractive as a first housing option, longer tenancies, more structure to evict if tenants breach the terms and financial incentives for people looking to move and improve their circumstances

Private rented should be the first and best option available for our generation not a tabo that puts the fear of god into people