Further Easing of Deposit Requirements

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Further Easing of Deposit Requirements

The High Court has just handed down judgement in a case which explores the boundaries of the Court of Appeal decision in Northwood (Solihull) and what the requirements are when signing a tenancy deposit certificate. There are also one or two other small points that were explored. JMW acted for the tenant in this case.

One of the more interesting aspects of this case was the very large number of renewals of the tenancy, both as fixed term and statutory periodic. These massively increased the potential size of the deposit claim. However, due to the actions of a previous solicitor these renewals all happened more than six years ago. This allowed for the court to consider whether the Limitation Act truly applied to tenancy deposit claims where the occupation of the property still continued. The High Court has held that it does and so claims over six years old appear to be barred in almost all cases.

The other interesting facet of this case was that the deposit prescribed information certificate was incorrect. First, it stated that the tenant could find out about the provisions for how deposit deductions could be made by looking at clause 6 of the tenancy agreement. However, the agreement did not have a clause 6 at all and the deposit deductions were explained in clause 5.3. The High Court held that this was an obvious error and any reasonable tenant would have looked at the agreement and realised that it was incorrect before reading the rest of the agreement and quickly finding clause 5.3. They would have then read that clause and obtained the necessary information and the ultimate purpose of the legislation would have been satisfied.

The second flaw in the deposit certificate was that it was entirely unsigned, not merely signed by an employee as was the case in Northwood. The first instance judge was entirely unconcerned by this but the High Court took a slightly different approach. The High Court held that the covering letter which had enclosed the deposit prescribed information was signed and that this covering letter represented a confirmation that the deposit information was correct. This seems a bit of a stretch in that the covering letter did not say anything about the accuracy of the prescribed information at all, and it was of course incorrect.

This case is likely to be appealed to the Court of Appeal and so care needs to be taken by landlords and agents in reading too much into it. However, the current thinking from the courts is clearly that small errors (and even quite large ones) in deposit prescribed information are allowed provided the tenant ultimately can find the right information within the documents supplied to them. Whether the Court of Appeal accepts this is still to be seen.

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