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  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.