Another blow for the rent deposit burdens of AST landlords
23 June 2014
Landlords of any assured shorthold tenancy (“AST”) have been dealt another blow by the courts, following the decision in Gardner v McCusker.
The county court in that case has held that the statutory requirement to register the rent deposit for ASTs applies where the original fixed term expires and a new tenancy is created.
The court gave no credit for the fact that the landlord had properly registered the deposit when it had first been paid at the outset of the original AST; the failure to re-register the deposit at the start of the new tenancy meant that the landlord was unable to rely on the notice served to recover possession and was ordered to pay compensation to the tenant.
This bad news for landlords follows the Court of Appeal decision last year in Superstrike Ltd v Rodrigues, which held that AST rent deposits paid before the tenancy deposit registration rules came into force on 6 April 2007 are still required to be registered even though the rules did not apply when the tenancy was created.
Since this latest decision gives an unfair windfall to tenants, landlords will now be hoping that draft legislation to reform the rules governing the registration of AST rent deposits will be brought into force sooner rather than later, although there is no timetable for this at present.
In the meantime, landlords will have to "watch this space" for an appeal against the Gardner decision and ensure that any AST deposits are now registered at the end of a fixed term AST as well as at its start.
This article was written by Emma Humphreys.
For more information please contact Emma on +44 (0)20 7203 5326 or firstname.lastname@example.org