Deregulation Bill

Baroness Hayter of Kentish Town Excerpts

Thursday 30th October 2014 Grand Committee

Moved by

[Baroness Hayter of Kentish Town]

24B: Clause 31, page 25, line 2, at end insert “—
(a) after subsection (10) of section 213 of the Housing Act 2004 (requirements relating to tenancy deposits) insert—“(11) Where an order made by the appropriate national authority under subsection (5) requires, in connection with the tenancy in respect of which a deposit has been paid, the provision of the name, address, telephone number, and any email address or fax number of the landlord; the name, address, telephone number, and any email address or fax number of any agent who is holding the deposit on behalf of the landlord may be provided instead.”;
(b) ”

[Baroness Hayter of Kentish Town (Lab)]

My Lords, a bit like government Amendments 25 to 35, which are in this group, Amendment 24B will close an unforeseen loophole in existing legislation. The loophole arises because, where letting agents are managing a tenant’s deposit on behalf of the landlord, they usually put their details on the documentation given to tenants. Obviously, that is particularly useful where landlords live abroad and where their only address for service in the UK is therefore that of the letting agent.

Under the terms of the tenancy deposit legislation, certain information, known as prescribed information, has rightly to be given to the tenants. Unfortunately, the wording of the order is highly prescriptive. It requires the landlord’s contact details, even if it is the agent who manages the deposit. There have been claims by tenants, including in court, that deposits have not been protected in accordance with the law. In fact, the agent has done everything correctly, other than to put down its address for service rather than the landlord’s home address. Nevertheless, a claim on behalf of a tenant has been upheld by a county court, meaning that what has been normal practice ever since tenancy deposit protection was introduced in 2007 is now potentially unlawful. There has not as yet been a High Court case on it, but clearly, given the county court’s case, there is now uncertainty and it seems much more sensible to fix this problem now before it is tested in the High Court. In the mean time, solicitors are taking this to court and challenging the proper protection of a deposit on behalf of a tenant.

--- Later in debate ---

[Lord Wallace of Saltaire]

My Lords, this clause and the government amendments are here because of the uncertainty and concern caused to landlords and tenants across the private rented sector by the Court of Appeal decision in the case of Superstrike Ltd v Marino Rodrigues. The noble Baroness’s amendment also touches on some of the implications of that case. The decision effectively interpreted the legislation differently from its original intention and contrary to the advice given by successive Governments. It left a large number of landlords at risk of court action and open to a financial penalty, because the tenancy deposit protection requirements must be complied with within a set period. That leaves landlords in an impossible position with no means of complying. The situation is made more complicated by the increase in the number of landlords resident outside the United Kingdom, which means that they are dependent on letting agents to deal with their tenants. Similarly, it has left tenants unclear about the status of their deposits.

The aim of Clause 31 is not to completely reverse the decision made by the Court of Appeal, as it is important that the protection offered to these tenants as a result of the ruling is retained. It gives landlords a grace period to protect those deposits and give the necessary information to the tenant. That applies to landlords who still hold deposits which were taken before the introduction of the tenancy deposit protection legislation for tenancies which rolled over into statutory periodic tenancies after the introduction of the legislation.

The clause will make it clear that where a deposit has been protected, the prescribed information is given to the tenant and the tenancy is subsequently renewed, there is no need for the landlord to keep providing the same information every time the tenancy is renewed. It will also be clear that this has always been the position and will continue to be from now on.

Where legal proceedings are under way at the time the provisions come into force, tenants will be protected from paying their landlords’ relevant legal costs where the court subsequently decides against the tenant in the light of these provisions. We see the provisions as striking the right balance between ensuring that tenants do not suffer financially as a result of the retrospective legislation and ensuring that landlords are not penalised where they have followed government advice. I hope that these changes are accepted as uncontroversial.

Finally, government Amendments 25 to 35 are technical drafting amendments.

The Government agree with the intention behind the noble Baroness’s amendment but are not sure that it is necessary. We understand that the law as it stands provides that, where the agent holds the deposit, it is sufficient for just the agent’s details to be included in the prescribed information. Article 2(1)(g)(iii) of the Housing (Tenancy Deposits) (Prescribed Information) Order 2007—I am sure that she knows it by heart—indeed states that,

“the name, address, telephone number, and any e-mail address or fax number of the landlord”,

should be provided. However, Section 212(9)(a) of the Housing Act 2004 explains that any reference in Chapter 4 of Part 6 of the Act—and hence in the 2007 order—to “landlord” in relation to any shorthold tenancy includes a reference to a person acting on his behalf in relation to the tenancy. Clearly, an agent managing the deposit on behalf of the landlord falls within that definition. Paragraph 40 of the regulatory impact assessment that supported the 2007 order covered this point, stating that:

“The person who receives the deposit will need to be the person who is registered with the authorised tenancy deposit scheme. Thus, in instances where the deposit is taken by a letting agent, the landlord’s details will not need to be included in this information”.

This is an issue with the deposit schemes that letting agent bodies have previously raised with the department, and I understand that they still consider the language of the Act and the supporting statutory instrument to be ambiguous. As I have set out above, we do not share that view. Of course, if they are able to provide evidence to the contrary we will consider whether a change to the order could be made to clarify the point, but we do not believe that any change to the primary legislation is required. I have asked officials from the Department for Communities and Local Government to contact the tenancy deposit schemes and letting agent bodies to discuss this further.

I hope with that assurance that the noble Baroness will be willing to withdraw her amendment. I thank her for the discussions we had before Committee and, if necessary, I am very happy to have further discussions. I commend Amendments 25 to 35 to the Committee.

[Baroness Hayter of Kentish Town]

My Lords, I thank the Minister for that. Clearly this would not have been brought up and supported by the groups I mentioned if there were not real concerns. They have counsel opinion that differs from that of the Government. Of course, if the Government would like to assure them that should it go to the High Court they will then cover all their costs and those of all landlords, maybe we could accept that. Would he like to make the offer now? Offer came there none.

The groups are doing this day to day—their lawyers have worries and counsel opinion continues to say there is a difficulty that the words “or their agent” do not apply to the instrument. That seems the problem. I also cannot see why this change cannot be made. It would be very easy and would make sure we did not have to go to the High Court to get a ruling. I urge that that meeting takes place before we come to Report, so that I can then consult these good organisations and, if necessary, table an amendment for Report if they are not reassured by the meeting. If it is possible to set that up before Report then I would be happy to withdraw this amendment at this stage. I think the nod means that the meeting will take place before Report. On that basis I beg leave to withdraw.

Amendment 24B withdrawn.