Current Rental News: Localism Act shakes up the paperwork for TDP Legislation.

By Steve Roulstone

Well it would seem we have reached the ‘All of the votes are in’ stage of the Localism Act and the changes in Law and its effect on the Tenants Deposit Protection legislation . These changes are now imminent, I have written before about the impact as charges were first of all discussed and then debated for the work which this act now confirms need to be carried out for virtually all Assured Shorthold Tenancies in the UK. Yes that’s right, all agreements entered in to that have now passed the initial six months (or longer?) fixed term, now need to be checked.

Clarity.

To be fair, this change in the Law clarifies the initial legislation. It has also been described as a way of closing all the loopholes, but without doubt, you need to add the judgement in the Swrpere case of last summer to the effect on what now needs to be done.

1988 Housing Act.

All Assured Shorthold tenancies that have passed their initial fixed term become periodic tenancies.  The Act itself does state exactly this as Section 5 of the Housing Act 1988 reads ‘A new Tenancy arising at the end of the fixed term’. So although no new tenancy agreement is entered into, the Law states a periodic is a new tenancy and therefore the necessary steps under the TDP provisions – deposit protection and PIN service – must be completed. The deposit will already be protected of course, but action may still need to be taken in respect of the two insured schemes. But what really matters and especially in the light of the much focused comments in the Swrpere v Nice 2011 judgement, is the serving of another PIN form within 30 days of the tenancy going periodic from now on, or by 5^th May for existing periodic tenancies. This has always been ignored before the Localism Act 2011 for two reasons. First it was overlooked simply because no new Agreement is signed.  Secondly under the original TDP legislation and Court decisions it was always possible to protect the deposit and serve the PIN late. But The Localism Act 2011 closes off all these escape routes – protect AND serve later than 30 days, either of them, and you have committed an offence with no escape.

Correct procedure.

The act becomes law on the 6^th of April and allows all details to be corrected by the 5^th of May. So action will need to be taken sooner rather than later. All of our Landlords and Tenants will be receiving letters confirming how we will deal with the corrected procedures next week, as we look to deal with the issue at the first possible opportunity. It is centred on the Prescribed Information that all Tenants complete at the commencement of an agreement (The PIN Form) and ensuring this, as well as the Terms and Conditions of the scheme the Deposit is registered with, are served again in the case of the PIN and have been served correctly in the case of the T&C’s.

Not stopped there!

For the first time, the legislation will also apply to ALL AST’s as it looks to ensure that ALL agreements even if they pre-date the TDP Legislation, will now have a protected deposit. This of course means ensuring Tenants who will have now occupied a property for at least five years will have to be considered, have the scheme explained and dealt with by May 5^th this year. There is no doubt that should this not be done, then it will be an offence under the Localism Act punishable by fine. It also needs to be said, that I am aware of enquiries by the ‘No Win – No Fee’ Solicitors as to the implications and procedures – could this be the next wave of adverts?

Summary!

Not easy, but suffice to say a broad brush approach should be taken and all Tenancies should be reviewed without delay. The whole Industry will need to get this right, and that means many questions will be asked and an understanding of the new legislation and the procedural changes this introduces will be needed by all concerned. We are fortunate to be associated with Companies who evaluate and advise about the impact such matters bring with them, which I believe will not stop with this topic alone. A case of watch this space, as further parts of the Act are clarified over the next few days with what defines a deposit next on the agenda!