The High Court has recently handed down Judgment in a case which will be of particular interest to residential landlords of assured shorthold tenancies. The case deals with the statutory requirements in relation to tenancy deposit certificates and the corresponding prescribed information.
Background
This case concerned a tenant of a residential flat in central London, who had been in occupation since the beginning of 2010. Initially the tenancy did not qualify as an Assured Shorthold Tenancy (AST) as the annual rent was above the specified limited. However, this was quick to change when the limit was increased in October 2010, at which point the tenancy automatically became an AST.
As a consequence of this change, the tenancy then gained protection under various relevant statute. One such protection being the requirement that prescribed information in relation to the deposit be provided to the tenant within 14 days (which has since been updated to 30 days).
In anticipation of the change of tenancy, the landlord's agent sent the tenant a letter updating them on this with various enclosures, one of which was their prescribed information.
The tenants occupation continued over many years, across a total of eight different tenancy arrangements. However, the relationship between the landlord and tenant eventually broke down which has resulted in subsequent litigation.
The Claim
A claim was originally brought by the tenant against the landlord for just over £120,000 for multiple statutory deposit penalties. The claim centres around a couple of key arguments, in particular that the prescribed information and tenancy deposit certificate were deficient due to the fact that:
- The deposit certificate mistakenly referred to the wrong clause of the tenancy agreement when it stated the circumstances in which the deposit could be reduced; and
- The prescribed information document itself was not signed by the landlord.
What was the outcome?
Judgment was initially handed down in this claim in October 2022 in favour of the landlord, but was subsequently appealed by the tenant to the High Court and was heard in February this year.
Both the County Court and High Court Judge were in agreement and found that:
- It did not matter that the Prescribed Information document mistakenly referred to the wrong clause in the tenancy agreement, as it would have been obvious to a reasonable person that it was a mistake and that it was evident what the document was in fact intended to convey.
- The unsigned certificate was enough to satisfy the statutory requirements, as the cover letter serving it was signed. It was found that the covering letter and prescribed information should be taken together and looking at them as one it makes it clear that they comply with the statutory purpose. The Judge found that by sending the prescribed information under their managing agents cover letter the landlord had inadvertently confirmed that they were happy with the content given and that this therefore had substantially the same effect as a signed certificate.
So what does this mean for landlords?
This is clearly good news for landlords and goes someway to clarifying some of the burdensome requirements they face.
This is going to be of particular importance for landlords who may currently be unable to obtain possession of their property under the section 21 route due to similar issues.
It is however important to note that this case does not say that unsigned prescribed information is now valid. It was only the signed cover letter that accompanied the information that made it valid.
Since the Judgment has been handed down it has been suggested that this case will be appealed by the tenant to the Court of Appeal, so landlords and their agents should be cautious about relying on these findings. Watch this space!
If you would like any more advice on this area, then please get in touch with our Real Estate Disputes Team.
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