Urgent Warning for Residential Landlords

Author: Caroline Walton

In the latest tenancy deposit case of Gardner v McCusker, the Judge issued financial penalties against the landlord for not issuing the required Prescribed Information. The Court quashed the Section 21 Notice and ordered the landlord to:

  • Return the deposit in full;
  • Pay a fine two times the value of the deposit;
  • Pay the costs

This judgment follows on from the decision in 2013 of Superstrike v Rodrigues where the Court confirmed that, if a tenant had paid a tenancy deposit in relation to an Assured Shorthold Tenancy (AST) entered into before the tenancy deposit rules came into force in April 2007, the deposit needed to be registered if the fixed term expired and the tenant continued to occupy.

In the case of Gardner v McCusker, a deposit of £600 was taken and protected on an AST of 6 months. The tenancy expired in May 2010 and a statutory period tenancy came into force. A Section 21 notice was issued in March 2013 by the landlord and when possession proceedings started the tenant issued a counterclaim, stating that no prescribed information had been served when the statutory period tenancy arose. The landlord sought to rely on the original prescribed information but this argument was rejected by the Court.

This case highlights the fact that Courts can apply the Superstrike Judgment to require Prescribed Information to be re-issued when a statutory periodic tenancy arises even, as will now generally be the case, the AST was granted after the tenancy deposit rules came into force and even if the Prescribed Information was provided to the tenant at the time of the grant of the AST.

This decision will increase the administrative burden on landlords as they will have to comply with the registration requirements both at the start of an AST and when the fixed term expires and the tenant remains. Even though there may be no payment changing hands after the fixed term expires, landlords need to ensure they have registered with a Tenancy Deposit scheme and serve prescribed information again within 30 days of expiry of the fixed term tenancy.

This decision also opens up the door to future potential disputes.

This decision does seem to accord with the deposit scheme providers who all take the view that it is prudent to reserve the Prescribed Information when a statutory periodic tenancy arises.

If you have any concerns or questions about tenancy deposits, please contact Caroline Walton on 01306 502215 or c.walton@downslaw.co.uk.