Q: I AM aware that all deposits now need to be registered, though I have been told by another landlord friend (A) of mine that I need to register the deposit again even when the tenancy goes ‘periodic,’ while another landlord friend (B) of mine has just told me that this is no longer the case. Please can you tell me what I should be doing as I am now very confused? Part 1 of 2.

Mrs S Stanway A: This week’s question is rather meaty, so I have decided to break it up into two parts. This week dealing with landlord friend (A) and in two weeks' time dealing with landlord friend (B).

The Housing Act 2004 introduced from April 6, 2007, the registration of all deposits taken on Assured Shorthold Tenancy agreements within an approved scheme and for ‘prescribed information’ to be presented to your tenant(s) within 14 days of receiving the deposit. From April 6, 2012, the timescale was increased to 30 days under the Localism Bill 2011 and severe penalties were also introduced should you fail to meet this deadline, affecting both the ability to issue notice (S21 notice) should you want to regain possession and in the form of a financial penalty which the courts must award if action was taken against the landlord for failing to meet the timescale/issue ‘prescribed information’. Once the deposit was correctly registered, it was assumed by most within the profession that the deposit would not need to be registered again, unless a new ‘fixed-term’ tenancy was taken out at the end of the existing tenancy. Many landlords allow the tenancies to roll over at the end of the fixed term under what is described as a ‘statutory periodic tenancy’ under the same terms as the original fixed term and no action is required by either the landlord or tenant.

Now for the interesting part and the following provides a classic example of what the Government intended with the statute under the Localism Bill and what they actually commissioned was to turn the lettings profession upside down creating fundamental problems for both letting agents and Landlords alike.

With many acts of parliament, it is not until they are fully tested in the courts that lawyers will go through the workings of the act word by word and interpret the true legal meaning.

This happened with Superstrike v Rodrigues 2013, when the Court of Appeal stated that the tenancy agreement was taken out before April 6, 2007, though went ‘periodic’ after April 6 2007 and the assumption was that the deposit did not need to be registered because it was not a new tenancy, only a continuation of the initial fixed-term tenancy.

However, the court stated that it was a new tenancy, a new agreement was entered into even though the tenant had not physically moved out of the house and back in again, nor received back the deposit, to consequently pay this back over again. Hence it was taken as fact by the court that a new deposit was taken for the ‘periodic’ tenancy.

However as The fresh deposit had not been registered within 30 days, so the S21 notice was not valid as this cannot be issued under such circumstances and the tenant was entitled to a penalty of up to three times the amount of the deposit.

Consequently, as most letting agents and landlords were not registering deposits again once they went ‘periodic’ there was now much debate within the profession as to what to do next as the consequences of failing to register deposits were potentially disastrous.

The general guideline was that in future, all deposits needed to be registered again with fresh ‘prescribed information’ issued again.

There was uncertainty over periodic tenancies that existed before April 6, 2007 as these had not been tested in court. In this respect your landlord friend (A) is correct. Though only up to March 25, 2015.

The Deregulation Act 2015 received Royal Assent on March 26, 2015 and has clarified the situation and corrected the anomalies that the Superstrike case had unearthed.

I will go through the new legislation and its implications in my next article in two weeks’ time.

Please continue to send in your letting-related questions to steven@sawyersestateagents.co.uk