A residential tenancy created on or after 28 February 1997 will automatically be an assured shorthold tenancy unless the landlord has served a notice on the tenant stating that the tenancy will not be one.
An assured shorthold tenancy allows a landlord to let the property while retaining the right to repossess the property at the end of the term. This contrasts with regulated and other assured tenancies, where the tenant may be entitled to stay in the property at the end of the term.
When dealing with an assured shorthold tenancy, landlords often ask whether they are legally able to serve notice. But landlords need to be particularly aware of the recent case, Charalambous and another v Maureen Rosairie Ng and another [2014].
In this case the tenants paid a security deposit to their landlady prior to the commencement date of their tenancy on 20th August 2002. This was before the rules came into force requiring a landlord to secure deposits under an authorised scheme. The tenancy was renewed each year until it became a periodic tenancy. The landlady wanted to regain possession of the property and in 2012 she served on the tenants notice under section 21 of the Housing Act 1988 requiring possession of the property. The tenants disputed the validity of the notice because their deposit had not been registered under an authorised scheme, a requirement brought in by the Housing Act 2004 and brought into force in April 2007.
The Court of Appeal held that the section 21 notice served on the tenants was invalid because the landlady had not done either of the following before serving the section 21 notice:-
- returned the deposit to the tenants; or
- placed the deposit in an authorised scheme.
This is the case even though when the landlady first took the deposit from the tenants, there was no obligation to secure their deposit. While there were no penalties for not protecting the deposit, the landlord could only serve a valid section 21 notice if the tenancy deposit was protected at the time of service or the deposit had been returned to the tenant.
This case highlights the importance for landlords to check whether they are in a position to serve a valid section 21 notice before they attempt to gain possession of a residential property.
If you are a landlord and thinking of re-gaining possession of your property in the future, please call us on 0116 289 7000 to discuss your options.
Sophie Crossley, Trainee Solicitor