No Rent Deposit but Rent Paid in advance?
Most landlords will be pleased by the clarification on the recent Court of Appeal ruling that has answered questions that Solicitors and County Court Judges have been faced with on a daily basis.
The case of Johnson vs Old which I am sure will be on every advocate and solicitors memorize list has been watched closely by landlords and agents as there has been much uncertainty in the courts as to whether rent paid in advance requires deposit registration or not.
The new ruling provides a clearer understanding for landlords around the country and now landlords can feel safe that their possession claims will not be thrown out of court and more so the fact that a line has been drawn as to the difference between a rental deposit and rent paid in advance. This landmark ruling means that landlords are not obliged to treat rent paid in advance as a deposit which requires registration protection under the Housing Act 2004.
The facts of the case concerned a tenant who was offered a sixth-month tenancy by a landlord and because the tenant did not have a frequent income the landlord asked for sixth month’s rent paid in advance. Not surprisingly when the landlord served the tenant a Section 21 HA 1988 notice the tenant countered by saying that a Section 21 notice could not be served because rent had been paid in advance which should have therefore been treated as a deposit and protected.
Annoyingly enough the tenant’s argument was successful at the first hearing and was then later challenged by the landlord at a second hearing in which the landlords defence was successful, this case clearly illustrates that judge’s rulings in the past have been inconsistent and it’s about time that the significance of this issue has been cleared up once and for all.
Like with every piece of good news there’s bad news! Although landlords will be relieved by this ruling it is speculated that this ruling will now open flood gates for landlords asking tenants for rent paid in advance rather than obtaining and registering a deposit and thereby defeating the purpose of the government tenancy deposit schemes which has been designed to protect deposit’s and avoid tax invasion by those known as the ‘Rogue Landlords’.
Have you issued a Possession Claim and had it set aside because you asked for advance rent? Call the My Eviction Lawyer team on 01565 634 100 for FREE advice.