Tag Archives: Assured Shorthold Tenancies

Very short term lettings breached “private residence” covenant

A long lease contains a covenant “not to use the leased property (or permit it to be used) for any purpose whatsoever other than as a private residence.”

If the long leaseholder advertises the property (a flat) for short term lets and grants a sequence of such lettings, is the leaseholder in breach of the covenant?

In Nemcova v Fairfield Rents Ltd [2016] the United Kingdom Upper Tribunal (Lands Chamber) said to avoid breaching the covenant, there must be a connection between the occupier and the residence such that the occupier would think of it as his or her residence albeit not for ever. “The occupier for the time being must be using it as his or her private residence.”

If the occupier is in the property for a matter of days (rather than weeks or months or years) that is a material pointer to the fact that the occupier is not using the property as a private residence.

To be used as the occupier’s private residence, there must be a degree of permanence extending beyond “being there for a weekend or a few nights in the week.”

Where a person occupies for a matter of days and then leaves the property it cannot be said that whilst occupying they were using the property as their private residence.

The occupation there would so transient that the occupier would not consider the property they were staying in as being their private residence even for the time being.

Each case is depends on it’s facts, relying upon the interpretation of the particular covenant against it’s factual background.

Based on the context in which this lease was granted, and the nature of the proposed relationship between the long lessor and long lessee and taking account the obligations entered into, the appellant had inevitably breached the private residence covenant by granting very short term lettings (days and weeks rather than months).

The tribunal said it was not possible to give a definitive answer to the question posed at the beginning of this piece save to say that ‘It all depends’.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Flat Landlord not responsible for Tenant fall in Common Parts

Where a lease is a lease of a dwelling-house which forms part only of a building, then, under section 11 (1A) of the Landlord and Tenant Act 1985 there is implied into the tenancy agreement a compulsory contractual covenant by the lessor to keep in repair the structure and exterior of the dwelling-house and the structure and exterior of any part of the building in which the lessor has an estate or interest (including drains, gutters and external pipes).

In Edwards v Kumarasamy [2015] Mr Kumarasamy’s assured shorthold tenant of his Flat 10, Mr Edwards, had tripped on an external paved area forming part of the apartment block’s common parts. Although he did not own them, Mr Kumarasamyh had a legal easement to use the front hall, the car parking space and Bin Store and other facilities provided by the head landlord.

The Court of Appeal found that this gave him an “estate or interest” in the paved area where Mr Edwards sustained his accident.

Was that enough to bring the extended covenant into play?

The Court of Appeal said Mr Kumarasamy’s legal easement over the front hall meant that the front hall was a part of a building in which he had an estate or interest.

In Brown v Liverpool Corporation [1983] the Court of Appeal held that steps leading to the front door of a self contained dwelling were part of the exterior of the dwelling.

In the current case, the paved area which led from the front door of the apartment block to the car park was not part of the exterior of Flat 10. However, the paved area was both short and also part of the essential means of access to the front hall in which Mr Kumarasamy did have an estate or interest because of his easement to use it. So the court ruled that the paved area could properly be described as the exterior of the front hall.

Mr Kumarasamy said Mr Edwards should have given him notice of the uneven paving stone and a reasonable opportunity to fix it but the court said such a qualification could not be implied here because the defect was outside the property actually let to Mr Edwards.

So the extended Landlord’s covenant applied to the paved area and Mr Kumarasamy was liable to Mr Edwards under it for the defect.

The Supreme Court has, in Edwards v Kumarasamy [2016] , overturned the Court of Appeal decision:

“….. that decision was wrong. The fact that a piece of property is a necessary means of access to a building cannot be sufficient for it to constitute part of the exterior of that building. Steps separated from the outside of a building by a two metre path cannot, as a matter of ordinary English, be said to be part of the exterior of that building.”

So it was strictly unnecessary to consider the other issues raised by the appeal.

However the Supreme Court agreed with the Court of Appeal that Mr Kumarasamy had an “estate or interest” in the paved area where Mr Edwards sustained his accident. But said that the repairing covenant implied by section 11 was to be interpreted and applied in precisely the same way as a landlord’s contractual repairing covenant. The rule in relation to such covenants was that, until he has notice of disrepair a landlord should not normally be liable for disrepair of property.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Inaccessibility of Landlord did not dispense with consent requirement

A tenant’s covenant not to carry out alterations without the landlord’s consent is not a covenant by the landlord to give consent, or to be available to receive requests for consent.

If the landlord cannot be found, so that consent cannot be requested, the tenant may not carry out the alterations without being in breach of covenant.

In relation to residential tenancies, section 47(1) of the Landlord and Tenant Act 1987 (“the 1987 Act”) requires that a landlord’s name and address be included in every demand for rent and other sums payable by a tenant to his or her landlord.

Section 48(1) of the 1987 Act also requires tenants to be supplied with an address in England and Wales at which they may communicate with their landlord, including in connection with proceedings.

Where a landlord fails to comply with either section 47(1) or 48(1), sections 47(2) and 48(2) say any rent, service charges or administration charges otherwise due from the tenant to the landlord are treated as not being due until the particular requirement is complied with.

In the Upper Tribunal (Lands Chamber) case of Raja v Aviram [2016] no rent or service charge was demanded by Mr Raja and he supplied no address to Mr Aviram.

The Tribunal said no statute said that a failure by a landlord to provide a name and address meant that a tenant could carry out alterations or take other prohibited steps without the requirement to obtain the landlord’s consent.

Here, Mr Raja could have obtained the name and address of his landlord by searching the Land Register, which he did at one point.

Even if he did not have that address by the time the works were carried out, there was simply no basis on which he was excused the obligation of seeking consent just because his reasonable efforts to locate his landlord had been unsuccessful.

A breach of covenant had been committed by the creation of at least one new hole in the wall of the building for a replacement boiler without the consent of Mr Raja.

This was still the case even though Mr Raja would have consented when satisfied that the work was to be carried out competently.

A modest breach of covenant had been committed. Given the circumstances of that breach it was extremely unlikely that this valuable lease could be forfeited without relief against forfeiture being granted. Though Mr Raja might have been entitled to nominal damages if he had gone to court.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Failure to return deposit meant assured shorthold tenancy possession proceedings still invalid

At the end of an assured shorthold tenancy a claim for possession may fail because the tenant has given the landlord a deposit and the relevant landlord’s notice under section 21 of the Housing Act 1988 was served at a time when the deposit had not been protected under the tenancy deposit scheme and/or the prescribed information in respect of the tenancy deposit scheme had not been provided to the tenant as required by section 213(6) of the Housing Act 2004.

Section 215(2) of the 2004 Act provides that if section 213(6) is not complied with in relation to a deposit given in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy until such time as section 213(6)(a) is complied with.

The Localism Act 2011 inserted section 215(2A) into the Housing Act 2004 which sets out the circumstances in which a section 21 notice may be delivered, notwithstanding that the deposit was not protected within 30 days of the landlord receiving it:

“(2A) Subsections (1) and (2) do not apply in a case where –

(a) the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant, or

(b) an application to a county court has been made under section 214(1) and has been determined by the Court, withdrawn or settled by agreement between the parties.”

So if the deposit has been repaid either voluntarily or pursuant to an application to the court, then it’s open to the landlord to issue the section 21 notice, even though the deposit may not have been protected within the prescribed period at the outset.

The Localism Act 2011 also amended section 214 so that if the deposit was not protected nor the prescribed information supplied within 30 days of the deposit being received by the landlord, the court ‘must’ make an order in respect of the deposit, and an order that the landlord pays the tenant an amount of between one and three times the amount of the deposit.

In the recent County Court case of Khuja v Chowdhury [2015] the Section 21 notice was found to be invalid because, though by then the deposit had been protected by the scheme and the tenant had received the prescribed information, the deposit had not been returned to the tenant.

The mandatory penalty was kept down to twice the amount of the deposit as the court found some mitigating factors including the fact that the landlord had acted honestly.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Unprotected Non Refunded Pre Regulation Tenancy Deposit invalidated repossession notice

Statutory regulation of tenancy deposits was introduced from 6 April 2007 by sections 212 to 215 of the Housing Act 2004. They were designed to end complaints that residential tenants’ deposits had been unreasonably withheld or purloined by landlords at the end of tenancies.

The sections have been amended by the Localism Act 2011.

In the Court of Appeal case of Charalambous & Anor v Maureen Rosairie NG & Anor [2014] Mr Charalambous and Ms Karali took a succession of short tenancies of 14 Sapphire Court in Spitalfields starting on 20 August 2002.

They paid a deposit of £1,560. On each renewal the same deposit was required to be paid. No further deposit was paid or money actually changed hands. Instead the original deposit was carried over and credited against each renewed tenancy.

The contractual term of the last of the written tenancies expired in 2005 and so by the time when the tenancy deposit protection provisions became effective, the tenancy had already become a statutory periodic tenancy.

The landlord continued to hold the deposit.

On 17 October 2012 the landlord served notice under section 21 of the Housing Act 1988 requiring possession of the property to be given after 17 December 2012.

The deposit paid by Mr Charalambous and Ms Karali was never held under a statutory scheme. Was the section 21 notice valid?

The Court of Appeal said Section 215 (1) (a) itself is unclear but the terms of Article 16 of the Commencement No. 4 and Transitional, Transitory and Saving Provisions) Order 2012 (“the Order”) plainly envisaged that as from the coming into force of the amendments made by section 184 of the Localism Act 2011 the code would apply to existing tenancies.

What was relevant was not the date at which the deposit was received, but the date on which the tenancy was in effect.

Article 16 (1) of the Order was clear that the 2011 Act amendments would apply to tenancies in existence on 6 April 2012.

Since the amendments made by section 184 included amendments to section 215 (1) itself, it must have been envisaged that section 215 in its amended form would apply to all such tenancies.

That on its own was enough to lead to the conclusion that the section 21 notice was invalid.

The case contained a number of interesting side views in the lead judgement.

Under the original version of section 215, the landlord could comply with the requirement to have the deposit held in accordance with an authorised scheme, even if this was not done within the 14 days then stipulated.

That may no longer apply given the amendment to section 215(1)(b) made in 2012. As regards failure to provide the necessary information, under section 213(6), the sanction preventing service of a section 21 notice applies until the prescribed deposit information notice is given to the tenant, even if that is done late (section 215(2)) and it’s saying: “until such time as section 213(6)(a) is complied with” was also significant, though the time stipulation is in section 213(6)(b). So, a distinction had been made, the landlord can retrieve the position, as regards the failure to serve the prescribed information notice, by complying late.

The same did not appear to apply to a failure to protect the deposit by an authorised scheme at all. Though the court made no decision on the point it may be that the only way in which the landlord can now escape from the provisions of section 215(1) is by returning the deposit to the tenant.

So the landlord here and any landlord in a similar position may well be precluded from serving a section 21 notice unless she repaid the deposit to the tenants.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Lenders had priority over Vendors in “sale and lease back” deals

Homeowners have agreed sale-and-leasebacks deals with investors to overcome debts.

In Scott-v-Southern Pacific Mortgages Ltd (2014), properties were sold to buy to let investors on the understanding the homeowners could remain as the tenants after the sales were completed.

However the sale contracts made no reference to the lease-backs to the sellers.

Some of those landlords had mortgages and failed to maintain mortgage payments.

The lenders were not told about the lease-backs to the sellers. They were informed that the properties were being bought with vacant possession. So they had not consented to the lease-backs.

Did those mortgages take priority over the agreements between the buyers and sellers or were the lenders bound by the agreed lease-back arrangements?

The sellers said they had overriding interests in the houses based on the promised lease-backs which were protected by them being in actual occupation when the sales were completed.

The Supreme Court said the rule that a buyer becomes the equitable owner of the property sold on exchange of contracts “applies only as between the parties to the contract and cannot be extended so as to affect the interests of others” i.e the lenders.

Accordingly the court were unanimous that exchange of contracts had not prior to completion empowered the buyers to confer equitable proprietary rights on the sellers capable of taking priority over the lenders.

So all the sellers had were personal claims against the buyers.

The acquisition of the houses may have been a vital precursor to a mortgage but where a property buyer needs a loan to finance a purchase, the purchase and mortgage form a seamless whole because the buyer would never have got the property without the loan.

The sellers’ claims against the buyers changed from being purely personal claims to being proprietary claims against the properties, capable of binding third parties, when the buyers completed their purchases from them and acquired the legal estates in the houses, but by then it was too late for the sellers to get priority over the mortgages taken by the lenders as an integral part of the house purchase completions.

The decision has important implications for other property transactions where the priority of derivative interests depends on the person granting them already having the legal estate in the property at the key time. The transactions potentially affected include commercial sales and lease-backs.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Receivers could serve Section 21 notice to end Assured Shorthold Tenancy

Section 21(4) of the Housing Act 1988 (“HA 1988”), imposes a duty on the court to make a possession order of a dwelling held under an Assured Shorthold Tenancy (“AST”) if it is satisfied that any previous fixed term AST no longer exists and the landlord or, at least one of them, has given to the tenant not less than two months’ notice in writing that he requires possession of the dwelling-house.

In McDonald v McDonald & Anor [2014] the landlords were the tenant’s parents. The parents had borrowed off Capital Homes Ltd (“CHL”), to buy the property and the loan was secured by a mortgage over the property. The tenant paid the rent with housing benefit and her parents used that money to pay the sums payable to CHL.

The mortgage conditions forbade any tenancy to a tenant assisted by social security. Other tenancies had to be ASTs previously approved by CHL. The parents failed to apply for approval. A further condition said the parents must advise CHL if they proposed to let to a family member. They did not do this either. They later fell into arrears and CHL appointed receivers of the property, (“the receivers”).

Under the mortgage conditions, they had the same powers as CHL, and they were the agents of the borrowers.

When the receivers were appointed, the tenant was in possession under the terms of an AST expiring on 14 July 2009. She kept possession after then under a statutory periodic tenancy which was subject to the landlord’s power to terminate and get a possession order under section 21(4) of the HA 1988.

The receivers claimed to use their powers under the mortgage to serve a notice (“section 21 notice”) in their own names on the tenant under section 21(4)(b) of the HA 1988 and to commence possession proceedings in the name of the landlords.

The section 21 notice was given by the receivers and not the landlords. Had they power to do this?

If the receivers had power to give the section 21 notice, they could do so in their own names because under section 45 of the HA 1988 the word “landlord” includes any person deriving title from the original landlord, and that would include CHL. Also, under the mortgage conditions the receivers could exercise all the powers that CHL were able to exercise.

On the other hand if they did not have power to give the section 21 notice, then their section 21 notice would be of no effect and the tenant’s statutory periodic tenancy would have continued as before.

The Court of Appeal said that the mortgage conditions had to be interpreted purposively. Their purpose was to enable the receivers to realise the mortgaged property in an orderly and efficient way.

The powers specified in clause 9.2.1 of the mortgage conditions included the power to sell the property and to take possession of it.

The powers conferred on the receivers must include power to do anything which is necessarily incidental to the exercise of the powers specified in the mortgage.

Here, service of the section 21 notice was an act which the receivers had to do to get vacant possession and thereby to sell the property at the best price.

The fact that:

– the mortgage conditions might have been drafted more widely so as to confer an express power on the mortgagee to give a section 21 notice; or

– that the mortgagee might have been able to serve the notice by virtue of being within the definition of “landlord”

did not mean that the receivers could not do so where they had that power under the mortgage conditions.

So the receivers had been entitled to serve the section 21 notice on the tenant and the tenant lost the appeal.

This blog has been posted out of general interest. It does not remove the need to get bespoke legal advice in individual cases.

Artificial SPVs were qualifying leasehold enfranchisement tenants

The Leasehold Reform, Housing and Urban Development Act 1993 (“the 1993 Act”) was intended to allow long term residential tenants of apartments in a building (“participating tenants”) to club together to purchase their landlord’s interest at a price determined in accordance with the 1993 Act (“collective enfranchisement”). However the 1993 Act says no “participating tenant” can hold more than 2 flats.

In Westbrook Dolphin Square Ltd v Friends Life Ltd [2014] Westbrook Dolphin Square Ltd (“Westbrook”) was the tenant of all the flats in the building under one long lease, so it created a structure to bring about a collective enfranchisement within the 1993 Act.

To do this it set up 612 new companies (“SPVs”). Each held leases of 2 flats. They all served notice on the respondent to collectively enfranchise for £111 million. No collective enfranchisement has matched or exceeded the scale of this.

WB Dolphin Square LLC (“LLC”), was owned by investors. The shares in each of the SPVs, and Westbrook were held as to 50% of the voting deferred shares by the LLC and as to the other 50% by another Jersey company, Dolphin Square Holdings Ltd (“Holdings”). LLC owned 100% of their non-voting ordinary shares. Thus the voting rights in the SPVs were held equally between LLC and Holdings with neither of them “controlling” the SPVs.

The respondent’s challenges to the Westbrook scheme fell under three categories:

1. The corporate structure.

The High Court agreed that the arrangement was a highly artificial one whose sole purpose was to qualify to pursue a collective enfranchisement claim.

Had the SPVs and LLC been “associated companies” within the meaning of the 1993 Act, all the SPV tenancies would have had to be ignored as qualifying tenancies. However the court accepted that the SPVs were not associated companies. Though they had a similar shareholding, no person held a majority of the voting rights, no person had the right to appoint directors and no person had control by agreement with others. All the voting and control rights were split equally between LLC and Holdings, because each had 50% of the voting rights. There was no agreement (or other arrangement) which gave either LLC or Holdings control. Nor was Holdings under the control of LLC because its shares were held by the trustees of a discretionary trust. Those trustees were independent and those trustees were not the nominees of anyone.

The court and Westbrook here accepted that there was no particular commercial purpose behind the scheme other than the enfranchisement purposes of getting around sections 5(5) and 5(6) of the 1993 Act which would have otherwise prevented such closely linked companies from enfranchising.

It was carefully set up to avoid any SPV having more than 2 flats, as to have let any of them have 3 or more would have prevented that SPV from being a qualifying tenant at all.

No superior corporate entity was allowed control of the SPVs but the arrangement preserved the economic benefits of the leaseholdings for the benefit of the group (in substance for LLC).

The respondent submitted that viewing the legislation purposively, Parliament had not intended the right of collective enfranchisement to be available where flat leases were granted solely for the purpose of avoiding sections 5(5) and 5(6) of the 1993 Act.

The court accepted that Parliament had targeted people (whether investors or not) who had three or more flats. But had used narrow wording eschewing anti-avoidance measures covering, for example, a person who had the beneficial interest in three flats each held by separate trustees, or an individual who owned three companies, each of which held the long lease of a flat. Wider definitions such as the definition of “associate” in the Insolvency Act 1986 would have been available to it yet Parliament had not adopted such a definition. It had stayed with the narrower wording. So the SPVs were not disqualified from being participating tenants.

As the scheme stayed the right side of the 1993 Act’s Associate Company rule it was a matter of interpretation whether the SPVs were “qualifying tenants” – and neither the structure under which the SPV was held, nor, the purpose of that structure could prevent them being such.

2. Price

The respondent said Westbrook’s Initial Notice specified an unrealistically low price and was therefore invalid. The court said that the figure of £111 million was a genuine opening offer. It was certainly not absurdly low.

3. Non – residential use

Under the Act more than 25% of the floor area of the building as a whole being put to non-residential use would have prevented a claim for collective enfranchisement.

The respondent had not in its original Counter Notice raised this challenge. It had been thought that omission would prevent the respondent from using it at court.

The court nevertheless entertained the issue but calculated that the non-residential parts of the building were within the 25% limit.

The court’s detailed investigation embraced the building’s offices, flats, company lettings, a champagne bar and restaurant and a health and fitness centre/spa. Some of the flats were only let for very short periods indeed.

Wider Implications

In most buildings, each of the flats are let on long leases so the rights to collective enfranchisement are held by all the occupying tenants. However with the expansion of privately rented accommodation more apartment blocks will be held on head leases with a multitude of shorter term tenancies similar to Westbrook beneath them. This may open the way to more head tenants, like Westbrook, being able to set up enfranchisement schemes in the future. Proposed letting structures may need to address this.

This blog has been posted out of general interest. It does not replace the need to get bespoke legal advice in individual cases.

Public authority land allocated for recreational purposes not registrable as village green

Where land is provided and maintained by a local authority under section 12(1) of the Housing Act 1985 (“1985 Act”) or its statutory predecessors, is the use of that land by the public for recreational purposes “as of right” within the meaning of section 15(2)(a) of the Commons Act 2006 (“2006 Act”)?

The meaning of “as of right” is, the opposite of “of right” or “by right”.

If a person uses privately owned land “of right” or “by right”, the use will have been permitted by the landowner – so the use is rightful.

However, if the use of the land is “as of right”, it is without the permission of the landowner, and so is not “of right” or “by right”, but is actually carried on as though it were by right – and therefore “as of right”.

The interpolation of the small word “as” makes “as of right” effectively the opposite of “of right” or “by right”.

The law distinguishes between acquiescence by the owner on the one hand and licence or permission from the owner on the other hand.

Use acquiesced in by the owner is ‘as of right’; acquiescence is the basis of prescription. But, use with the licence or permission of the owner is not ‘as of right.’

Permission involves some positive act or acts on the part of the owner.

On the other hand passive toleration is all that acquiescence requires.

In the recent Supreme Court case of Barkas, R (on the application of ) v North Yorkshire County Council & Anor [2014], Helredale playing field (“the Field”) was in Whitby, and owned by Scarborough Borough Council (“the Council”).

The Council laid out and maintained the Field as “recreation grounds” pursuant to section 80(1) of the Housing Act 1936, with the consent of the Minister as required by that section, the Housing Act 1957, and latterly section 12(1) of the 1985 Act.

Helredale Neighbourhood Council applied to the North Yorkshire County Council to register the Field as a town or village green under section 15 of the 2006 Act.

The Supreme Court said so long as land is held under a provision such as section 12(1) of the 1985 Act, members of the public have a statutory right to use the land for recreational purposes, and so use the land “by right” and not as trespassers, so that no question of them using it “as of right” could arise.

Whether user was “as of right” should be judged by “how the matter would have appeared to the owner of the land”, which must be assessed objectively. Here a reasonable local authority in the position of the Council would have regarded the presence of the public, walking with or without dogs, taking part in sports, or letting their children play, as being an exercise of the public’s statutory right to be on the land and to use it for those activities: since the Field was being held and maintained by the Council for public recreation under section 12(1) of the 1985 Act and the Acts that preceded it.

Where a local, or other public, authority has lawfully allocated its land for public use (whether for a limited period or an indefinitely), it could scarcely be appropriate to infer that members of the public have been using the land “as of right”, simply because the authority had not objected to their using the land. To find the contrary would take very unusual and exceptional facts.

In such a cases, Parliament could hardly have intended that such land would become a village green just because the public had used it for twenty years.

Not only would the local authority not be expected to object to the public use: to have done so would have been positively inconsistent with their allocation decision.

A private owner, on the other hand, would be expected to protect his or her legal rights because he has no legal duty and no statutory power to allocate land for public use, and no ability to allocate land as a village green.

So the Helredale Neighbourhood Council’s appeal failed and the land was not registerable as a Town or Village Green.

This blog has been posted out of general interest It does not replace the need to get bespoke legal advice in individual cases.

In initial 30 days residential landlord’s contract to protect tenant’s deposit fulfilled preconditions of termination notice

Private landlords can take proceedings to regain possession of their property without having to give any reasons under the Housing Act 1988 using Section 21’s automatic right of possession once the fixed term has expired.

A landlord cannot use Section 21 to regain possession during the fixed term. They can serve a Section 21 notice on the tenant during that term, providing the date they state they require possession on does not precede the end of the fixed term.

If their tenant paid a deposit, Section 215(1) (a) of the Housing Act 2004 (“the 2004 Act”) says the landlord cannot rely on the Section 21 notice unless the deposit has been protected in accordance with the tenancy deposit schemes.

In Tummond, R (on the application of) v Reading County Court & Anor [2014] the landlord had let a property for 6 months under an assured shorthold tenancy.

In December 2012 the Landlord served a notice requiring possession at the end of the tenancy under section 21.

In June 2013, after the fixed term had expired, the landlord commenced proceedings for possession, relying on that notice.

The claimant asserted that the landlord could not rely on the section 21 notice because it had been served at a time when the claimant’s deposit was not held in accordance with an authorised scheme. Accordingly, the landlord could not rely on the Section 21 notice.

Section 215 is headed “Sanctions for non-compliance”. However, there had been no non-compliance in this case.

The 2004 Act required that the deposit be protected within 30 days (s.213 (3)). This had been done.

The 2004 Act also required that the prescribed information referred to in s.213 (5) of the 2004 Act be provided in substantially the prescribed form within 30 days (s213 (6)).

This too had been done.

In so far as there had been any other “initial requirements” under the authorised scheme these had been complied with inside the 30 day period, and actually by 2nd January 2013.

Since there had been no “non-compliance” there could be no justification for “sanctions” predicated on there being “non-compliance”.

Moreover, Section 215(1) (b) would only be triggered if the landlord had failed to comply with the initial requirements, including protection of the deposit, within the prescribed 30 day period.

The clear inference was that unless and until that occurred there would be no applicable sanction.

The claimant’s case that there would be was wrong.

In the interim before the 30 day period expired the landlord had contractually agreed to comply with scheme requirements and to protect the deposit within the 30 days.

The claimant’s case that he would in that intervening period still be subject to the “sanction” of s.215 (and s.214) until the deposit had been formally protected was untenable.

In this case where the landlord was contractually bound by the tenancy agreement to protect the deposit under an authorised scheme from the moment of its receipt that Landlord would “hold” the deposit “in accordance with an authorised scheme” even before the deposit was protected.

The fact that the defendant had at the time of service of the Section 21 notice been contractually obliged to deal with the deposit in accordance with an authorised scheme satisfied the requirements of s.213 (1).

The existence of that obligation to deal with the deposit in that way meant that from the moment the deposit was received by the landlord, it was also being “held” in accordance with an authorised scheme.

At all subsequent times the money was dealt with in accordance with the scheme requirements. So the court rejected the tenant’s claim.

This blog has been posted as a matter of general interest. It does not remove the need to get bespoke legal advice in individual cases.