Landlords who fail to protect deposits on £100,000 a year tenancies may court action from renters because the Labour Secretary of State for Housing and Planning John Healy signed off a new law missing a vital word.
The Assured Tenancies (Amendment) (England) Order 2010 is due to take effect from October 1 – but legislators missed out the word ‘new’ and have thrown the new regulations in to confusion.
The rules should have stated ‘new agreements’ rather than ‘agreements’ so contracts already running were not included.
Revised guidance has already come from the Communities and Local Government Department (CLG) before the regulations are due to start.
The updated rules are aimed to offer deposit protection to all tenants by extending assured shorthold tenancy agreements (AST) to cover rent of up to £100,000 charged in a 12-month period.
Currently, an AST only covers rent over 12-months up to £25,000.
The CLG had to announce doubts that deposit protection could apply to tenancies that were not ASTs at the time they were agreed.
Instead, the CLG suggested deposit protection should cover new tenancy agreements, renewals and new deposits taken on or after October 1, 2010.
Now, the CLG has had a change of mind and advises all deposits for ASTs of up to £100,000 a year going back to April 6, 2007 should have protection.
This is aimed at stopping a tenant bringing legal action under the deposit protection rules against a landlord who did follow the rules for older rental agreements.
This leaves letting agents, landlords and tenants up in the air when the new rules start.
Guidance from the government is helpful, but is mitigation but not a defence in court.
As things stand, the law says all deposits must have protection and landlords who do not follow the rules face compulsory fines of three times the unprotected deposit.
Privately, CLG lawyers admit that a tenant taking a landlord to court may be the only way to decide how this law should be applied.