Update | Landlord and tenant: tenancy deposits and prescribed information

The problems associated with tenancy deposit regulations have been ongoing, and there are sadly still unresolved issues - far too many for a scheme which was supposed to be a simple solution to the problem of landlords failing to return tenants deposits at the end of the tenancy. Since I last wrote there have been several significant cases reported. In this article I want to concentrate mostly on the 'prescribed information'.

As hopefully most landlords will ?know by now, just protecting the deposit is not enough. You also have to provide 'prescribed information' to the tenant within 30 days after receipt of the deposit money. Both protection with a statutory scheme and the provision of this information are essential if landlords are to avoid liability for the penalty for non compliance (section 214 Housing Act 2004). It is the information itself that is prescribed and not the form in which it should be provided. It would be nice to have a prescribed form, but sadly all we have are the regulations, and have been left to develop the form for ourselves.

However, first I want to look at the need to serve the prescribed information at all.

In Ayannuga v Swindells [2012] EWCA Civ 1789 the landlord had protected the deposit and had indeed provided part of the prescribed information. However he had not served all of it, as he considered it unnecessary - after all the information was available on the tenancy deposit scheme website and the tenant could easily find it out for himself.

Their Lordships disagreed. The legislation said the landlord should provide this information. Although, under the rule in Ravenseft Properties Limited v Hall, it is sometimes acceptable to provide information which is "substantially to the same effect" as that prescribed by regulations, this does not excuse a failure to provide the information at all. Furthermore the information required under the tenancy deposit regulations is: "of real importance to a tenant. They define the circumstances in which the tenant can recover the deposit and also the means by which disputes in relation to the deposit and its repayment can be resolved, including resolution without recourse to litigation."

So the landlord lost his possession case and was ordered to repay the deposit of £950 and pay penalty of £2,850.

If therefore any of your clients are ?minded to 'pooh pooh' the need for prescribed information on the basis that most of it can be found online anyway, a quick discussion about Ayannuga v Swindells might be a good idea.

I now want to consider the question of when the prescribed information needs to be served, and the case of Superstrike v Rodrigues [2013] EWCA Civ 669.

On its strict facts, this case has a fairly limited remit. It concerned a tenancy deposit which had been paid to the landlord in January 2007, before the tenancy deposit regulations came into force.

Subsequently in January of the following year, the fixed term ended and a statutory periodic tenancy under section 5 of the Housing Act 1988 took its place. The deposit however remained unprotected as the landlord believed that protection was not necessary. It has been widely stated that the legislation does not 'bite' on deposits paid before the commencement of the legislation.

However in this case, their Lordships decided that in fact the legislation did apply. The periodic tenancy which follows the fixed term is a new tenancy. In which case (the argument ran) the deposit is deemed to have been paid back to the tenant and then repaid to the landlord at that stage. The Court of Appeal held therefore that even though no actual money had passed, the landlord had in fact 'received' the deposit, bringing it into the scope of the regulations and the requirement for protection and service of the prescribed information ?within 30 days. The tenant's appeal was therefore allowed and the landlord lost his case for possession. This case despite its apparent limited remit, has caused widespread concern, and indeed panic in the landlord community.

Angry and unhappy

The statement that a periodic tenancy is in fact a new tenancy came as a big surprise to most landlords. Many were amazed and shocked by the idea and by the suggestion, propounded by some, that this rule would now apply (and more worryingly, would already have applied) every time a tenancy fixed term ends and a periodic tenancy starts, leaving landlords who had failed to re-protect and re-serve at that stage in default and vulnerable to claims.

Numerous articles, forum posts and comments from angry and unhappy landlords appeared on the internet, fearful that they would be made bankrupt by aggressive penalty payment claims and claims by tenants seeking compensation for possession orders that should never have been made. Some even suggested that the deposit would now need to be re-protected and the prescribed information re-served at the end of every monthly period.

Other commentators however are more sceptical about the disruptive effect of this case, saying that it should be confined to the precise facts of the case, i.e. situations where the deposit was paid before April 2007 with a periodic tenancy being created after that date, and where the deposit had never been protected at all.

However even if the rule is deemed to have a wider application, it is debatable whether a landlord would or should be penalised for not re-serving prescribed information in circumstances where there has been no change from the information previously provided. Can it not be deemed re-served (for example), in the way that the deposit is deemed repaid?

So far as the tenancy deposit schemes themselves are concerned, they had also (on the whole) been of the view that no re-protection was needed at the end of the fixed term where no new tenancy agreement was given, and this was ?reflected in their terms and conditions and FAQ. At the time of writing, the four tenancy deposit schemes are consulting with the government over the effect of this case, and no doubt a statement will be issued in due course.

It would be very helpful however if this case could be reconsidered by the Supreme Court and some general guidance given by their Lordships regarding the interpretation of the regulations. At present we seem to be lurching from one case to another, with landlords often being left in the dark as to the correct procedure for them to follow. ?This cannot be right.

Finally, let us take a quick look at what the prescribed information should contain.

No end

This is set out fairly clearly in The Housing (Tenancy Deposits) (Prescribed Information) Order 2007. In essence this provides for the landlord to:

? give information about the tenancy deposit scheme used and its procedures, along with;

? details of the parties and the property and the deposit paid; and

? a certificate signed by the landlord confirming that the information is correct to the best of his knowledge and belief and that he has given the tenant an opportunity to sign also and confirm ?its correctness.

?The information about the tenancy deposit scheme and the procedures for using the adjudication service is usually given in a leaflet provided by the scheme administrators for that purpose. The rest of the information is generally provided in a separate form and certificate.

For example, TDS provide a form for users of their schemes, as does the DPS. Ideally the form with the leaflet should ?be given to the tenant along with the tenancy agreement and the tenant be ?asked to sign and date it and initial all the pages at that time.

One interesting point which has come up recently is the question of who should give the prescribed information. I have heard tell of an (unnamed) County Court decision where apparently the judge held that that the information was invalid (and therefore refused to make an order for possession under section 21) on the basis that the notice contained the agents details rather than those of the actual landlord.

As a County Court decision, this case will not be binding on anyone, but even so it might be wise for agents to include their landlords details when drafting the forms.

There seems to be no end to the problems associated with the tenancy deposit regulations and it is likely that we have not seen the end of them. On the basis of the cases discussed above I would suggest that:

? Landlords are made aware by their advisors, of the critical importance of the prescribed information;

? Until we have further information regarding the effect of the Superstrike case, the prescribed information be re-served where there is a change in the tenancy, in particular when a tenancy changes from a fixed term to a periodic tenancy and back again; and

? the notices be drafted as coming from the landlord rather than the agent

?It is also perhaps worth mentioning that it is rumoured that tenants are now perusing prescribed information forms with a fine toothcomb looking for errors that they can use to defend section 21 eviction proceedings.

As this could prove extremely expensive for landlords, particularly if their tenants ?are not paying rent, it is worth the effort to take care over the drafting and service of these notices.