Tenancy deposits – beware!

Many farms and estates include residential property let on Assured Shorthold Tenancies. As the churn rate of tenants in rural areas tends to be lower than elsewhere, many of these tenancies will have begun prior to April 2007.

“Why mention April 2007?” I hear you ask. The reason is that it was then that the tenancy deposit regulations came into force, along with the Government authorised Tenancy Deposit Schemes. You would be forgiven for thinking that this is pretty irrelevant for tenancies that began prior to that date and where a deposit was paid and it is being held outside an approved TDS. However, the Court of Appeal does not agree and its ruling may well affect your ability to regain possession of the property.

In a recent case, Charalambous & Anor v. Maureen Rosairie Ng & Anor if you must know, the Court of Appeal found in favour of the tenant when the landlord was trying to take possession. The landlord had served a Section 21 Notice under the Housing Act 1988. However, the Court held that it was invalid due to section 215(1)(a) of the Housing Act 2004. This section states:

(1) … if a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy at a time when—

(a) the deposit is not being held in accordance with an authorised scheme, …

Therefore, with a pre 2007 tenancy, a landlord should either ensure that the deposit is held within a TDS or return the full deposit prior to serving a section 21 notice if it is to be successful. This is rather a pointless fiddle, but it is very much worth being aware of if you plan to regain possession of a residential property let under an Assured Shorthold Tenancy.

If you would like any further information or to discuss any rural related matter, please contact Tom Wills, head of the agriculture & estates department at Sintons.