Judge gives key ruling on ‘shared property’ rental deposits

London’s County Court has set a worrying precedent for landlords who operate properties that are rented ‘jointly and severally’ but where, over the years, tenants have been left to sort out their own deposits as tenants come and go.

The judgement by Judge Luba QC concerns landlord Richard Boddy who bought a property in Maida Vale, London (pictured) in 2003 as his home.

He later moved out and rented the three-bedroom flat as a ‘house share’ with the tenants jointly and severally responsible for paying the rent and bills.

This arrangement continued via three ‘churns’ of tenants until Covid struck, whereupon it fell apart after one tenant packed her bags and returned to Australia, requesting that her deposit cover any cleaning charges and unpaid rent.

Damages

At this point the remaining tenants sought damages arising from the non-protection of their deposits, arguing that a new tenancy should have been issued by the landlord at each ‘churn’ and that, therefore, their deposits should have been protected.

At a hearing earlier this year the judge dismissed their claims agreeing with the landlord that they were licencees and not tenants and therefore, because they did not have ASTs, the deposit did not need to be protected.

But the tenants, who still live at the property, took the case to appeal and have now won.

judge luba rental deposits

Judge Luba (pictured) agreed with them that each ‘churn’ was in effect a new tenancy and that their deposits should have been updated and protected afresh.

Read the full judgement.

He was also somewhat poetic in his judgement, highlighting how the only evidence of the original tenants was their unclaimed and ‘dog eared’ post festering in the hallway.

Boddy must pay £3,615 which is £1,205 in respect of each of the three churns which produced a new tenancy to which they were in turn either or both parties to.

Luba gave the lightest penalty he could to the Boddy as he felt that the landlord had not purposefully tried to dodge his deposit protection obligations.

The judgement affects other areas of PRS law, in particular evictions; one of the many reasons tenants can avoid eviction is if a deposit has not been properly lodged with an approved scheme, although landlords can return deposits prior to an eviction to avoid this.

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1 Comment

  1. Rodney Townson

    Time for the minimum fine for not complying with deposit protection to be removed. This would remove the incentive for no win no fee lawyers to find something better to do with their time.

    Judge Luba’s judgement matches what we have advised our members:
    Where a joint and several tenancy exists, when one or more tenant leaves, a new agreement should be created listing the new tenant names and the deposit scheme notified.
    While the new tenancy can be for a shorter period than 6 months, avoiding locking in existing tenants, the landlord will not be able to serve a Section 21 Notice until four months into the new tenancy. This could be problematic, especially for landlords letting to students.

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