The case: Lowe -v- Governers of Sutton's Hospital in Charterhouse [2024] EWHC 646 (ch)
On 21 March, the Court of Appeal handed down an important decision regarding tenancy deposits taken with respect to assured shorthold tenancies ('AST') and particularly the provision of the prescribed information ('PI') of the designated scheme being used.
The decision, in effect, supported and upheld DJ Luba's decision at first instance (a highly respected judge and authority in residential letting matters).
Relevant background
- Owing to the limitations on when a tenancy can be 'assured' in nature (the rent being too high), the tenant's original tenancy was a 'contractual' tenancy. A deposit was taken, and the relevant contractual clause dealt with how it was held and could be accounted for. Shortly after inception, the relevant limitations were altered, and the contractual tenancy was automatically transformed into an assured shorthold tenancy.
- In anticipation of the change in status, the landlord's agent sent to the tenant, under cover of a signed letter, the prescribed information of the scheme in which the deposit was to be held. Unfortunately, the prescribed information served remained unsigned by the landlord and referred to an incorrectly noted provision of the assured shorthold tenancy regarding how the deposit could be used.
- A total of 8 written assured shorthold tenancies were entered into between the landlord and tenant at various points for the defined fixed terms,, and the landlord did not, provide the prescribed information relating to the deposit at any further point.
The focus of the appeal was the prescribed information deficient because of:
- the incorrect reference to the assured shorthold tenancy clause and / or
- the landlord's failure to have signed the certificate?
A technical point around the need to re-serve the prescribed information upon each new tenancy primarily arises from the fact that the tenancy started as a contractual tenancy, not an assured shorthold tenancy.
Outcome
Although not in complete agreement with the rationale of DJ Luba's decision, the appeal was dismissed and the decision at first instance upheld, so that;
- The erroneous reference in the prescribed information to the assured shorthold tenancy term did not mean that this document had not been properly given. It is the 'substance' of the required information, that is the focus. The tenant had been referred to the assured shorthold tenancy and could locate the information irrespective of the error. The statutory purpose of promoting transparency, with a view to avoiding disputes, was satisfied.
- In looking at the prescribed information documents together with the (signed) covering letter, the form was "substantially to the same effect" and fulfils the statutory purpose.
- The provisions of s215B of the Housing Act 2004 were introduced in response to the Superstrike decision – technically, multiple deposits are "paid" where there are multiple rolling tenancies created by operation of law and, therefore a requirement to provide prescribed information with each. Parliament thought that undesirable and so s215B was enacted to ensure that if the information is properly provided at the outset, it does not need to be given again. In this instance, the words of the statute "in connection with" were found sufficiently pliable to cover a situation where a deposit is paid in respect of something that is not an assured shorthold tenancy, but which later becomes one, by operation of law.
Comment
Not all that many cases reach the Court of Appeal in the landlord and tenant short-term lettings arena- despite a multitude of points that would benefit from a binding authority that have arisen from the various attempts of prior governments to regulate short-term lettings.
This decision is refreshingly common-sense and will be welcomed by landlords (and agents) who have done their best to be compliant in an ever-changing landscape. Minor errors can and do happen, and any alternative finding, in this instance at least, I think would have been overly harsh and not what the legislation was intended to protect/promote.
