Government To Legislate On Superstrike

Landlords and managing agents will be familiar with the problems caused by the case of Superstrike Ltd. -v- Marino Rodrigues.

The circumstances are that the landlord had granted a fixed-term tenancy in January 2007 and the tenant had paid a deposit. This, however, was before the requirement to register a deposit under the Housing Act 2004, which did not come into force until April 2007. The fixed-term tenancy ended and the landlord served a two-month Notice Requiring Possession under Section 21 of the Housing Act 1988. However, the court found that it was not effective because a new tenancy was created at the end of the fixed-term of the original tenancy, when it became a ‘statutory periodic tenancy’ in the absence of a new tenancy between the parties. As it was a new tenancy the deposit should have been registered – again – and as it had not been the Section 21 Notice was not effective.

This caused consternation amongst landlords and managing agents, as there are countless tenancies that have become periodic but the deposit has not been re-registered, which meant it would not be possible to serve effective Notices Requiring Possession (under Section 21 of the Housing Act 1988) without returning the deposit monies first.

In practice there have been reports that courts are adopting a similar attitude, including where a new fixed-term tenancy is entered into between the same landlord and tenant but the deposit is not being re-registered.

The Government have now indicated that they intend to clarify the position through the Deregulation Bill and an amendment has been filed that would:

1. Ensure there is a 90-day grace period within which landlords, who took deposits from fixed term tenancies granted prior to April 2007, can register the deposit and provide the Prescribed Information to the tenant.

2. Where a deposit was taken for a fixed-term tenancy after April 2007 and the deposit was registered at the start of the tenancy, if a statutory periodic tenancy subsequently arises, the landlord does not need to register the deposit again or serve further Prescribed Information. Similarly, if the landlord enters into a new tenancy with the same tenant in respect of the same premises then he or she does not need to re-register the deposit and serve further Prescribed Information.

This amendment has been filed by the Department of Communities and Local Government. It still has to complete consideration through the House of Commons and the House of Lords and receive Royal Assent but when it does become law it should resolve the difficulties that arose through Superstrike.

Should you have any queries concerning the matters raised please contact
Jeremy Teall – Partner and Housing Management Team Leader – on
020 8567 3477 or e-mail jteall@prince-evans.co.uk