Landlords Need to Be Aware of Changes to Deposit Protection Scheme

Landlords Need to Be Aware of Changes to Deposit Protection Scheme

Landlords should be aware that users of the “MyDeposits” deposit scheme is to end deposit protection automatically after the end of the fixed term of the tenancy unless specific action is taken by the agent or landlord.

The scheme, a spin-off of the National Landlords Association, appears not to have made any announcement about the change, but details appear on its website. It says that users of its insurance based scheme – mainly landlords, but also a number of agents – will have 30 calendar days from the end of the fixed term of the tenancy agreement to renew or extend the deposit protection.

This comes in the wake of the Court of Appeal publishing a verdict back in June which is having a far reaching impact on Landlords across the whole spectrum of the Private Rented Sector. You may have heard of the case; “Superstrike vs. Marino Rodrigues”?

A very long story short, the Court of Appeal confirmed in its judgement, should a tenancy become a statutory periodic tenancy after its initial fixed term has expired, then a brand new tenancy is created rather than the existing arrangements being continued on. This in itself is not particularly earth shattering provided that the original tenancy agreement was a fully legally conforming document, however, of greater import is the Court also said the agent or landlord must re-protect the deposit and re-issue the Prescribed Information to a tenant who stays on when the tenancy becomes statutory periodic. If the same tenant stays on but signs a new fixed-term AST agreement, then new Prescribed Information must also be issued.               

Without wishing to become technical, basically, Prescribed Information contains the contact details of both parties and information about which of the approved schemes the deposit is protected with and the terms and conditions relevant thereto. For a deposit to be properly protected, legally conforming Prescribed Information must be issued, it is not enough to just utilise one of the approved deposit schemes. So what are the theoretical implications? Well the argument goes that if a deposit is not properly re-protected in this way, then (a) A section 21 action by the landlord to remove the tenants will fail in Court and, worse, (b) the tenant could ask a Court to award them the deposit and up to 3 times the deposit amount as a penalty against the Landlord.

Most agents/Landlords use one of 3 of the approved deposit schemes, My Deposits is the only one to end deposit protection automatically after the end of the fixed term of the tenancy. In a FAQ section of their website, they say, “ … We will automatically unprotect a deposit protection 30 days after the fixed term ends unless you inform us the tenancy has rolled into a statutory periodic tenancy or has been renewed....”

Landlords, if you or your agent, have been required to issue new Prescribed Information but have yet to do so, your Urgent Action is required, NOW! And if you’re using the My Deposits scheme, you’ll also need to re-protect the deposit within 30 days of the current fixed term agreement expiring.

For landlords who have yet to experience our award winning services, give us a call on 01603 766860 if you'd like any further information or the Heads Up on what your current agent should be doing for you.


Mike White

Martin & Co Norwich

15th November 2013