Tenancy deposit protection schemes have issued joint guidance for buy to let landlords on serving prescribed information when tenancies turn from fixed to periodic terms.
The information follows consultation with lawyers and the Communities and Local Government Department.
The advice will not protect any landlord from a legal challenge by a tenant.
The guidance follows the ruling set in the Court of Appeal during Superstrike v Rodrigues earlier this year.
In that case, the judge ruled that when a fixed term tenancy switches to a periodic tenancy, landlords should reserve the prescribed information and reprotect the deposit.
The penalty for failing to serve the papers is three times the amount that should protected.
The deposit protection schemes advise:
• For fixed term tenancies starting before April 2007 that have switched to rolling periodic tenancies, the prescribed information should be reserved
• For fixed term tenancies after April 2007 that are now rolling tenancies – the issue was not dealt with in the case and until this is clarified by a court or new legislation, no one knows the legal status of a deposit taken under these circumstances.
The risk is a court may decide a notice to quit is not valid and award compensation to the tenant if the prescribed information is not reserved.
“If you have not served the Prescribed Information at renewal of the tenancy or it becoming a statutory periodic tenancy there is a risk that a court might find that you have not complied with the legislation and not allow you to use the section 21 procedure. In addition you may find that you are subject to a financial penalty for not serving the prescribed information,” says the guidance issued by the Tenancy Deposit Scheme.
The guidance suggests landlords should check with their tenancy deposit protection scheme whether their deposits remain protected.