Sean Hooker: Joint Several Tenancy Agreements and deposit protection

2 August 2021

A recent county court case involving a Joint Several Tenancy Agreement (JSTA) could have wider ramifications for deposit protection schemes, writes Sean Hooker.

Who really makes laws? Politicians or judges? A perennial question and not one we ponder much in our daily lives. I remember when the Superstrike v Rodrigues case, established that statutory periodic tenancies were new tenancies and, as such, new deposit protection was required when a tenancy lapsed into one.

The tenancy deposit schemes had to devise a way for deposits to be re-protected that kept landlords and letting agents within the law. They did this by allowing for the deposit to be re-protected using the old details and for the prescribed information to reproduced for the landlord to re-serve it to the tenant again.  The process was relatively straightforward for the free custodial scheme, however, for the insurance-backed version, the landlord or their letting agent faced the prospect of paying another fee, which prior to this they did not have to.

At the time, the MyDeposit scheme felt that was unfair, so took the decision to allow the re-protection for free. It did, however, cause quite a kerfuffle in an exercise when, after a set deadline had passed, an automatic mass un-protection of deposits took place. Superstrike v Rodrigues eventually led to a law change for deposit protection, but court cases do have unforeseen consequences in the way a law is reinterpreted.

The impact of Superstrike also had the effect of changing the way MyDeposits viewed joint and several tenancies and the decision was made at the time, that changes to these did not require the deposit to be re-protected, but an amended version of the prescribed information would be needed to be re-served to all the tenants. It also required the tenants to do a deed of assignment and for this to be valid. Again, for the insurance-backed scheme, this was free of charge.

At the time, I did joke that this was a bit like the Only Fools and Horses scene, when the character Trigger was awarded a medal from the council for saving them money. He was a street sweeper and had used the same broom for 20 years. His perplexed friends Del and Rodney found this incredible, until Trig announced it had had 17 new heads and 14 new handles! How could it be the same broom then? I pointed out that, in theory, a JSTA could continue forever with the same deposit. However, rather than over complicate the matter, then we stuck to the process as it stands now.

Cue many years later and a very recent court case in the London County Court. Sturguiss and Anor v Boddy involved an absent landlord, who for years had let his tenants get on with it and effectively they replaced tenants when one left until, as the judge commented, the only evidence that remained of the original occupants was a discarded, now dog-eared piece of post in the increasing pile in the communal hallway.

The original, first instance trial had determined that, as the landlord was unaware of the changes, they were in effect sublets by the original tenants and therefore licenses to occupy, as such they were not covered by deposit protection rules, which only apply to Assured Shorthold Tenancies.

However, the judge in the main trial was having none of it. He determined that every churn was effectively a new tenancy and as such the deposit needed to be re-protected and the prescribed information re-issued to the tenants. Failure to do this was a breach of the law and therefore a penalty was due to each and every tenant who had been party to the tenancy. Now, given this was between one and three times the amount of the original deposit, even though the judge only awarded the minimum amount, it amounted to a hefty sum.

Of course, this is an extreme case, and the court was also only a county court so does not set legal precedent, however, given who the judge was and his involvement in a previous landmark case, it is likely to be more than this. The judge was H H J Luba QC, who ruled in the case Trecarrell House Ltd v Rouncefield, which led to the issue relating to the serving a gas safety certificate and Section 21. That case has gone to appeal and been partly overturned, but is still due to be referred to the Supreme Court. 

This is another case likely to be appealed as the questions asked by the judge himself means that even for the more common change of tenant churn, the issue of the deposit must be considered. Of course, this story is likely not finished and it may well mean the deposit schemes changing their process in the future or even a change in the law. 

Personally, I would be done with Joint Several Tenancy Agreements and ensure that everyone has an individual tenancy agreement. The joint several liability only really benefits the landlord as they can chase the other tenants for the defaulting rent or for damages if their flatmate does a bunk. Of course, the advent of HMO regulations has led to many landlords issuing separate ASTs anyway and the deposit schemes more than often treat deposit shares individually. 

I know we all love a Shakespearean Puck-like judge, but the law is not a toy. As he muses his dogeared post abandoned in the communal hallway, Judge Luba probably feels his interpretation is helping to change the law for the better, however methinks, his words serve merely to put a cat amongst the pigeons. “And those things do best please me That befall prepost’rously” . Robin Goodfellow, AKA Puck, in A Midsummer Night’s Dream.

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