Beware of the Dog!

16 January, 2015

A recent Court of Appeal case, Charalambous and another v Maureen Rosairie NG and another [2014] EWCA Civ 1604, clarified what happens when a landlord has rented out his residential property to a tenant under an assured shorthold tenancy prior to the coming into force of the legislation requiring landlords to register a tenant’s deposit in a “tenancy deposit scheme”.

Such schemes were introduced on 6 April 2007 under the Housing Act 2004. They were designed to put an end to residential tenants’ complaints that their landlords were unreasonably withholding their deposits at the end of the tenancy. Within 30 days of receiving a deposit a landlord must pay it into a designated scheme and provide specified information to the tenant. If landlords fail to comply with the statutory regulations, they can be financially penalised and prevented from terminating the tenancy.

In this case, Charalambous took a tenancy back in 2002 and paid a deposit. The tenancy was renewed and the deposit carried over a couple of times. When the last tenancy expired in 2005, a statutory periodic tenancy began.

The landlord served a notice under section 21 of the Housing Act 1988 requiring the tenant to give up possession in 2012.

The deposit had not been registered with a tenancy deposit scheme (at the time of taking a deposit there was no such requirement) so the court looked at whether the statutory regulations applied to the landlord in these circumstances.

The Court of Appeal decided that the landlord was not subject to the penalties for failing to register the deposit or give the tenant the specified information. However, although the landlord was not strictly speaking obliged to register the deposit, because of when it was received, the landlord could only serve a section 21 notice if the tenancy deposit was protected at the time of service of the notice or if the deposit had been returned to the tenant.

In this case the landlord had served the notice without registering the deposit into a scheme or returning the deposit to the tenant, so the notice was invalid and the landlord could not terminate the tenancy.

If you find yourself in similar circumstances, whether a landlord or tenant, it is important to seek legal advice before taking any action.

Finally, I have a confession – this case is not about a dog but I liked the headline more than Beware the Tenancy Deposit Scheme! For a full case report, please click here