Countdown to June 2015 for long-term Landlords to avoid hefty fines

The changes to AST (Assured Shorthold Tenancies) deposit rules are in force. Landlords have until 15 June 2015 to avoid significant fines under the new rules set out in the Deregulation Act 2015.

As a Landlord of an AST you are required by law to protect your Tenant’s deposit and lodge it with an authorised independent protection scheme. You are also required to notify your Tenant in writing about this giving them full details of where the deposit is held. This has been the case for all AST since 2007.

Then the unexpected decision of the Court of Appeal case in Superstrike ltd v Rodrigues now just referred to in the annals of Landlord and Tenant legislation as the Superstrike case held that landlords who had let their properties prior to 7 April 2007 but had allowed the tenancy to continue after 6 April 2007 without completing a new AST, had in effect created a newperiodic tenancy and therefore the Landlords should have registered their Tenants’ deposits. This judgement was an unusual step towards retrospective compliance and in some cases landlords were experiencing problems gaining possession of their properties. In addition, if you fail to protect your Tenant’s deposit, you could be fined up to three times the value of the deposit which in Central London and the South East, these fines could be substantial in a particular where whole property folios are affected. The other method was to register deposits late but this method also caused its own complications. There was a lot of uncertainty in the rental market as a result and so with pressure on the Government and the Courts to come up with a definitive solution, The Deregulation Act 2015 which received Royal Assent on 26 March 2015 confirmed the decision in Superstrike but also gave Landlords a 90 day grace period from 26 March 2015 to register a Tenant’s deposit in an authorised protection scheme and serve the relevant information.

So the clock is ticking and if you want to avoid any hefty fines of up to three times the value of the deposit and more importantly avoid any difficulties in gaining possession of your property, take action now and register your Tenant’s deposit by no later than 24 June.

This article was written by Seema Parikh, Managing Partner at MPR solicitors and is for information purposes only and does not constitute legal advice.