Residential tenancies - is a section 21 notice effective if served before the deposit is protected?

The outcome of a recent County Court case means it may now be possible to rely on a section 21 notice to end a tenancy agreement provided the tenant’s deposit is lodged in the correct procedure.

Under current legislation (since 6 April 2007), a landlord must join a tenancy deposit scheme (‘TDS’) if a tenant under a residential assured shorthold tenancy (‘AST’) pays a deposit. The landlord is required to protect the deposit and provide the tenant with information about the TDS within 30 days of receiving it. If the landlord fails to comply, he cannot serve a notice under section 21 of the Housing Act 1988 unless the deposit is returned to the tenant in full (or in part by mutual agreement).

However, a recent case may have changed this position.On 18 December 2012, the tenant took an AST for an initial fixed term of six months commencing 20 December 2012. The tenant was to pay a deposit and the landlord was to register this with a TDS, within 14 days of receipt.

On 18 December 2012, the landlord served a section 21 notice on the tenant notifying him that she required possession at the end of the fixed term. On 2 January 2013, the tenant received a certificate stating that the deposit reached the landlord on 22 December 2012, and was protected from 2 January 2013. In June 2013, the landlord started possession proceedings and the tenant argued that the landlord could not rely on the section 21 notice because it had been served at a time when the deposit was not held in accordance with a TDS. The district judge dismissed the tenant’s argument and refused permission to appeal.

The tenant sought judicial review of the County Court’s decision to refuse the right to appeal. The High Court denied the request and commented that as the landlord had complied with the requirements of the Housing Act within 30 days, the section 21 notice was effective even though it was served before the deposit was protected by the TDS.

Therefore, if this decision is applied in future, it will be possible to rely on a section 21 notice served at a time when the deposit is not held in accordance with a TDS, provided that the landlord places the deposit in a TDS within 30 days of receipt.