Another AST landlord bites the dust ……..

3 July, 2013

Landlords granting Assured Shorthold Tenancies (‘AST’) have received another blow from the Court of Appeal in their decision Superstrike Limited v Marino Rodrigues.

The case concerned an AST entered into before the tenancy deposit requirements of the Housing Act 2004 came into force in April 2007. The original fixed term tenancy in this case was entered into before April 2007. The fixed term of the tenancy ended in January 2008 and the AST continued as a statutory periodic tenancy. In June 2011 the landlord served a notice under section 21 of the Housing Act 1988 requiring possession of the property. The issue for the Court of Appeal was whether the landlord was entitled to do so despite the non-registration of the tenant’s deposit.

The tenant argued that on expiry of the fixed term a new and distinct statutory tenancy came into force pursuant to the 1988 Act and the deposit should have been protected within 14 days of that date. The Court of Appeal agreed, holding that if the parties had been aware of the legal consequence upon the expiry of the fixed term, they were likely to have agreed that the landlord should continue to hold the deposit to protect against any tenant breaches during the continuation tenancy. On that analysis, the tenant had paid and the landlord had received a deposit in respect of the new tenancy in January 2008. Consequently, when the landlord served the section 21 notice, it was in breach of the 2004 Act and was not entitled to a possession order.

This case serves as a warning that landlords will not be immune from the tenancy deposit rules even when an AST was granted before the relevant legislation came into force. Given the average length of most ASTs, this issue should not arise often but where it does the landlord will need to analyse the relevant sequence of events carefully before serving a section 21 notice.