How one three-letter word caused havoc over new law

News Category: Industry News

A tiny, three-letter word – ‘new’ – is thought to have been accidentally left out of regulations when they were formulated to raise the threshold of Assured Shorthold Tenancies. The regulations went on to be passed, apparently with no one noticing the mistake, ironically made by the New Labour government.

The intention of CLG lawyers was that when the £100,000 threshold kicks in on October 1, only new AST tenancy agreements to that level would have to have their tenancy deposits protected.

But because the word ‘new’ was apparently omitted, the requirement for tenancy deposit protection had to be interpreted retrospectively, to cover tenancies made on or after April 6, 2007 – when mandatory deposit protection was brought in.

After the blunder was spotted, CLG had to admit there was a question mark as to whether mandatory deposit protection could be made to apply to tenancies that were not ASTs at the time.

It went so far as to issue guidance only last week that tenancy deposit protection would only be required for new tenancy agreements, renewals and new deposits taken on or after October 1.

But it has now advised that, to cover the possibility of a tenant bringing legal action against a landlord who did not protect the deposit in the case of an older tenancy, all deposits should be protected for tenancy agreements of up to £100,000 a year, going back to April 6, 2007.

The Tenancy Deposit Scheme has also issued detailed guidance notes for registration of these tenancies from October 1, again to help avoid the prospect of legal action against agents and their landlords.

In a statement, the TDS said: “The guidance takes account of the opinions of CLG, that the increase in the threshold will affect new tenancies and tenancies that are renewed or where a new deposit is taken after October 1; and that existing tenancies with a rental value of between £25,000 and £100,000 a year should also be registered.

“As well as registering the tenancies with a rental value up to the new threshold, tenants also must be provided with the same legally prescribed information and tenancy clauses in agreements as they would expect with all other ASTs.”

The TDS also announced that the forerunner to its official scheme, the voluntary TDSRA, will cease to operate on October 1.

The new TDS Guidance Notes are under Frequently Asked Questions on the TDS website at www.thedisputeservice.co.uk


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