Chris McGrath, Solicitor at Housing Rights Service provides a comprehensive analysis of the Superstrike judgment and its impact in Northern Ireland

A recent UK court of appeal judgment concerning the protection of tenants' deposits when a tenancy becomes periodic has been the subject of much discussion.  This decision may impact on tenancy management practices in Northern Ireland.

A periodic tenancy is a new tenancy and deposit must be protected again

The appeal required the court to consider two issues

• Is a new tenancy created when a statutory periodic tenancy arises at the end of a fixed term?
• Where a deposit has been paid at the start of a fixed term agreement is it “received” by the landlord again when the tenancy becomes a new statutory tenancy?

Lord Justice Lloyd clearly stated that a “new and distinct statutory tenancy” was created at the end of a fixed term tenancy. He also held that, although no actual money changed hands, the landlord should be treated as receiving the deposit on the renewal of the tenancy.  Otherwise the deposit would only have been held in security for the expired fixed term tenancy.

The Superstrike judgment has caused alarm in England & Wales as it may make it difficult for landlords and agents to serve the necessary paperwork on tenants they wish to evict.  It has also placed an additional administrative burden on landlords and agents who will now be required to serve prescribed information on tenants each time the periodic tenancy renews.

Protecting the deposit when a tenancy renews in Northern Ireland

It’s important to note that the legislation on tenancy deposit schemes in England differs from that here in Northern Ireland.  A decision by the English Court of Appeal will be followed by the lower courts in NI but the NI Court of Appeal is not bound by this decision.

The decision in Superstrike could mean that landlords who fail to protect their tenants’ deposits or serve prescribed information on tenants each time a periodic tenancy renews run the risk of a fixed penalty or prosecution for failing to comply with our own tenancy deposit protection laws.

Guidance for periodic tenants, landlords and agents

Until definitive guidance is issued by the Department for Social Development managing agents of periodic tenancies should play it safe by:

• protecting their tenants’ deposits in an approved scheme if the tenancy began before 1 April 2013 and is now a periodic tenancy
• serving prescribed information on the tenant each time the periodic tenancy renews.  The tenancy renewal date is usually the date when the rent is due

This should be seen as good news for tenants who are in periodic tenancies and would not otherwise be entitled to have their deposits protected by an independent scheme.

Chris McGrath, Solicitor at Housing Rights Service has provided a comprehensive analysis of the Superstrike judgment and its impact in Northern Ireland. Download using the link below.