MyDeposits has announced that it is to automatically unprotect some deposits where tenancies turn statutory periodic from the winter of 2013 / 2014 Unless landlords or letting agents take some action. No actual date has been announced.
According to their website:
You will have 30 calendar days from the end of the fixed term tenancy agreement to update the status of the protection with my|deposits, otherwise we will automatically unprotect the deposit.
One of the reasons given by the scheme is because:
Since we launched in 2007, a growing number of deposits protected with the scheme have not been unprotected at the end of the tenancy. This is causing confusion amongst our Members and their tenants, particularly when dispute resolution is required.
It seems the problem being faced is that at the end of tenancies, landlords and agents are repaying deposits without problems and not going on-line to actually unprotect the deposit. This will leave a large number still essentially protected but where the tenancy has long since ended.
Comment is also made about the recent Court of Appeal decision Superstrike ltd. v Rodrigues although quite how relevant that decision has in relation to the automatic un-protection of deposits is a little unclear.
Landlords and letting agents will receive four email notifications prior to the end of the fixed term (as provided when the deposit was first protected). Landlords and agents will be required within 30 days of the end of the fixed term to either extend the deposit into a statutory periodic tenancy, end the deposit because the tenant has vacated at the end of the term or, end the deposit and re-protect if a new tenancy has been issued. There will be no fee for the extension but a new protection fee is payable if a renewal assured shorthold tenancy is done.
If however the landlord or agent does nothing, the deposit will become unprotected after the 30 days. Its unclear from the information whether the deposit is immediately unprotected after 30 days of inaction or sometime after any notice. Presumably such a notice is one as required by paragraph 5(3B) schedule 10 Housing Act 2004 which must give information about the determination to cease to retain the deposit under the scheme and the date the deposit ceases to be retained. Under the schedule, that date must not be within three months from receipt by the landlord of the notice [paragraph 5A(7) schedule 10].
It seems that once the deposit has been extended it will remain protected indefinitely. Given that the majority of tenants remain after the initial fixed term (except most student lets I suppose) it's unclear how this will help the problem of landlords and agents not unprotecting deposits at the end because now that it's rolling on indefinitely the position is no different to now and the deposit remains protected forever until the scheme is notified. The problem of landlords or agents failing to login to the website and notify that the rolling on periodic tenancy has now ended must surely remain?
What should landlords do?
Clearly this is yet more paperwork and hassle for landlords.
For landlords or agents already registered with MyDeposits there isn't much that can be done other than comply for now. Perhaps consider putting future deposits into the Deposit Protection Service custodial scheme which has no such rules 1.
All the documentation and FAQs refer quite specifically to a statutory periodic tenancy. It is therefore unclear whether our MyDeposits assured shorthold tenancy agreement is affected because of course it never ends and no statutory periodic tenancy ever arises. (Which is also why our tenancy agreements are unaffected by Superstrike and no second set of prescribed info is required).
Although it should be noted the DPS insured scheme does require notification about the status of the tenancy at least 30 days prior to the end of the fixed term. Quite how that's possible is unclear because the rules stipulate prior but the status may not be known until shortly after the term has ended. ↩