Landlords beware!

[Clitheroekid]

A recent decision in the Central London County Court has been greeted with some surprise (though as it's HHJ Luba maybe it shouldn't have been!) and consternation by landlords, so I thought that any Fools who let their properties to multiple tenants (e.g. student lets) should be aware of it.

It concerned a very common scenario with this type of letting, where one tenant leaves and arranges informally for someone else to take their place. Usually, the incoming tenant pays the outgoing one their share of the deposit.

In very simplified terms the judge decided that every time this happened it created a new tenancy, and that the new tenancy was subject to the raft of rules and regulations that plague residential tenancies these days.

In particular, he decided that the rules relating to the protection of deposits applied, and that as the landlord had dealt with these arrangements informally, and had therefore not set up a fresh deposit protection on each change of tenant, they were in breach of the deposit regulations.

The net effect was that the landlord had to pay £1,200 to each of three tenants. As usual, of course, it wouldn't have just been the £3,600; the landlord would almost certainly have had to pay several times that sum in both their own and the tenants' legal fees.

And although it wasn't an issue in this case it's not just the deposit rules that one has to be careful of - it's all the other rules that apply to a new tenancy, such as supplying a gas safety certificate, a copy of the How to Rent book, checking immigration status etc. A failure to observe any of these requirements every time there's a change of tenant could result in a criminal record and/or an inability to regain possession of the property.

There's a good summary here - https://www.lexology.com/library/detail ... &utm_term=

For those who want to read the whole judgment it's here - https://www.bailii.org/ew/cases/Misc/2021/10.html

Moderator Message:
All the replies to this post have been about the investing aspects (and similar) and off-topic for Legal Issues. I am therefore moving the replies (and a copy of the OP) over to a copy of this topic on the Property Investment Discussions board.

Please continue the off-topic discussion over there at https://lemonfool.co.uk/viewtopic.php?f ... 16#p433513

(chas49)

[Amaryllis]

Thank you for this information, Clitheroekid.

I have wondered whether I am doing this right. I let to sharers rather than students, using AST agreements with joint and several liability. I protect each tenant's share of the total deposit individually.

When one tenant leaves, I issue a new AST, which includes a statement whereby the existing tenants who are staying confirm (signed and dated) that they are happy for their shares of the deposit to continue to be held with the DPS.

I then protect the new sharer's deposit with the DPS. So all 3 tenants' deposits are protected.

Is this okay? Thank you so much!