Deposit Breaches and RRB
People should be familiar with the deposit rules by now, but here’s a quick crash course:
Landlords must register the deposit and serve prescribed information within 30 days of the deposit being received;
If a landlord breaches those rules then the tenant can claim up to 3x the value of the deposit per breach;
There is a new breach for each new tenancy, subject to a six year limitation period, if the deposit rules have still not been complied with;
A tenancy becoming a statutory periodic tenancy following a fixed term counts as a new tenancy and therefore is a new breach. This is based on a case called Superstrike Ltd v Rodrigues, so when I refer to Superstrike this is what I mean.
None of that should be new to anyone, hopefully, but these rules have been in force for nearly 20 years and landlords are still getting caught out, so it is clearly not universal knowledge.
I had a question from Julie Ford about how the RRB transition might affect deposit breaches, particularly whether, if a landlord has failed to comply with the deposit rules, does the introduction of RRB create a new tenancy and therefore a new breach to be claimed for?
When RRB comes into force it will end all fixed terms and create something called ‘Section 4A Assured Tenancies’ (named after the amendment to the Housing Act 1988 created by S1 of RRB). S4A Tenancies are not the same as Statutory Periodic Tenancies that were dealt with in Superstrike; those are created by S5 of the Housing Act 1988. At para 26 of the Superstrike judgment LJ Lloyd comments that when a fixed term ends it creates a ‘new and distinct’ tenancy, but that was specifically in reference to S5. S5 uses the language of surrender and regrant; the fixed term ends and a new and distinct periodic tenancy arises. Accordingly, it is not a given that Superstrike would apply to S4A tenancies.
S146 RRB adds some clarity in that it specifically states that the S4A tenancy that arises on commencement date is a ‘continuation’ of the previous tenancy; compare this to the language of S5 which creates something ‘new and distinct’. Echoing what I wrote earlier, ‘continuation’ is not the language of surrender and regrant.
On this basis, I do not think that the transition from fixed term to S4A tenancies will be considered a new tenancy for the purpose of the deposit rules and so does not cause a new breach.
