Admin headache for letting agents

An award-winning South West law firm is warning that letting agents and landlords face an administration nightmare after The Court of Appeal recently ruled in favour of a tenant.

The ruling has the potential to impact upon thousands of assured shorthold tenancy agreements that have automatically rolled over in to a statutory periodic tenancy.

The warning from Coodes, which has seven offices across Cornwall and Devon, comes following the Superstrike Ltd v Rodrigues decision where Rodrigues, the tenant, successfully argued against Superstrike’s use of the preferred accelerated possession procedure, a section 21 notice, because they did not receive the correct deposit notification.

Coodes’ head of buy-to-let team Jo Morgan, said: “As of April 2007 all rent deposits have to be placed in a tenancy deposit scheme (TDS). “The landlord, Superstrike, claimed that because the tenancy was signed before that date that they could obtain a possession order against Rodrigues.

“The distinction of a statutory periodic tenancy as a new and distinct tenancy from the written fixed term tenancy is established law so there was little new there.”

The twist, according to David Williams, a solicitor in Coodes’ commercial property department, was amendments brought in by the Localism Act 2011 that mean that Superstrike should have placed the original deposit in a TDS at the start of the statutory periodic tenancy and notified their tenant of this within 30 days of receipt.

It was deemed that the deposit was not correctly protected meaning Superstrike’s s.21 notice and their attempts to use the accelerated possession procedure to remove Rodrigues from the property failed.

David said: “Tenancies can still roll over, but this decision clarifies that there is an obligation on the landlord to give the tenant, each and every time it rolls over, prescribed information about the deposit being protected within 30 days of the renewal.

“Furthermore the decision firmly puts to rest the myths, firstly that taking two months rent at the beginning of a tenancy and keeping some or all of the additional month’s rent if a tenant defaults can act in place of a deposit; and secondly having a one page written endorsement to a pre-2007 tenancy can circumvent the TDS regulations.

“And for agents, if the tenancy rolls over, the landlord may decide they want to review the situation on a month-by-month basis, which means sending details of the deposit being protected by a TDS repeatedly or paying deposits back to tenants on short notice without the time to carry out final inspections. “That’s a lot of administration and a lot of paperwork for landlords and letting agents.

“There’s also the argument that it might be easier to give the deposit back to the tenant each time and ask for a new one that will be registered.”

For more information on this issue please contact Jo Morgan or David Williams at Coodes Solicitors on 01726 874700 or email them at jo.morgan@coodes.co.uk or david.williams@coodes.co.uk.