Case law: Landlords who don't repay pre-April 2007 shorthold tenancy deposits not placed in protection scheme lose right to recover property
Following a Court of Appeal ruling on commercial properties and residential buildings, landlords who have not put pre-6 April 2007 assured shorthold tenancy deposits into government-approved deposit protection schemes should return them, or lose their right to recover possession of the property without giving a reason.
This update was published in Legal Alert - February 2015
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Previously, it was thought that any deposit taken before the deposit protection rules came into force did not have to be put into a government-approved scheme.
However, the Court of Appeal has ruled that while there is no obligation to put pre-6 April 2007 deposits into a such a scheme, failure to do so means the landlord loses the right to automatically repossess the property without having to give any reasons once the fixed term (usually of six months) is over. Landlords holding such deposits can therefore only automatically repossess their property if they return the tenant's deposit in full first.
- Landlords holding pre-6 April 2007 assured shorthold tenancy deposits should consider whether to return them, to safeguard their right to recover their property automatically.
- If they do, they may also wish to take new deposits, but must put these into a deposit protection scheme, so the scheme can arbitrate and allow deductions if the tenants have damaged the property.
Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.
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