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Tenancy Deposits - an Update

A recent Court of Appeal decision has emphasised again the importance of landlords ensuring they comply with the requirements of the Tenancy Deposit Scheme.

In December 2014 the Court of Appeal in Charalambous and another v NG and another [2014] EWCA Civ 1604 determined that a landlords notice, seeking possession issued under Section 21 of the Housing Act 1988, was void and the landlord was unable to obtain possession of the property.

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In this case a tenancy had been granted in August 2002 for a fixed term of one year. A deposit had been paid in the sum of £1,560.00.

The tenancy was renewed for a further fixed term of one year in 2003 and again in 2004. A statutory periodic tenancy arose when the last renewal ended on 17 August 2005.

Failed to Deposit in Recognised Scheme

The Section 21 Notice was served in October 2012. The landlord had failed to pay the deposit in to a recognised scheme and the prescribed information had not been served upon the tenants.

At the time the deposit had been paid the regulations introduced by the Housing Act 2004 had not been implemented. The Court of Appeal followed the decision in Superstrike Ltd v Rodrigues. The landlord could not have complied with the regulations when the deposit was received or when the statutory tenancy came into effect in 2005. However, the Court of Appeal held that the Section 21 Notice was invalid. The landlord should have repaid the deposit to the tenants before serving the Section 21 Notice.

This decision is an important reminder for all landlords to ensure that the requirements of the Tenancy Deposit Scheme Regulations are met, or the deposit repaid in full to the tenant, in order to ensure the validity of the Section 21 Notice and preserve the landlord’s ability to regain possession.