If you are a Landlord of a property where you took a deposit and the tenancy went “periodic” before the Tenancy Deposit regulations came into force in April 2007 you may think that you are safe from the Regulations. However the Court of Appeal has recently decided that the situation is not as clear as we thought it was.
In the particular case in question, the deposit was taken in 2002 and the tenancy went periodic in 2005 presumably at the end of a fixed period. The Court of Appeal held that although the Landlord was not in breach of the Regulations and could not be sued for the penalty for not having a deposit, the Section 21 Notice (Notice to Quit) was still invalid.
This is because the wording of Section 215 (1) (a) of the Housing Act 2004 says
"if a tenancy deposit has been paid in connection with a shorthold tenancy, no Section 21 Notice may be given in relation to the tenancy at a time when;
a. the deposit is not being held in accordance with an authorised scheme"
If you are the Landlord of a property affected by this you need to either protect the deposit or return the same to the tenant before issuing your Section 21 Notice.
It is hoped that the government will amend the deposit regulations again to remedy this unintended consequence.