Why the churn of a tenancy is more important than ever.

A recent court judgement has seen a tenancy "churn" be classified in the same way that a brand new tenancy would be, at least from a deposit protection perspective.

Judge Luba QC found that in the case of Sturgiss & Anor VS Body & Ors, the landlord should have re-protected the tenants deposit at each "churn" of tenant, and re-served all tenants with the relevant prescribed information, despite officially no "new" tenancy agreement negotiated.

The Original Case

To put some context behind the judgement, the property had been let to numerous tenants who each paid their "share" in both rent and bills, with rent being paid to the lead tenant who would pay it onto the landlord every month. Over some time, certain tenants vacated and new tenants were introduced - paying the vacating tenant their share of the deposit as they took on a room. Occasionally, tenants would swap rooms to suit their needs.

The judgement of the initial court case, which was awarded in favour of the landlord, suggested that as the original tenancy had not officially been surrendered by the tenants, no new Tenancy Agreement should have been offered. Additionally, the tenants had not entered into an Assured Shorthold Tenancy, so the deposit did not need to be protected within a scheme, the occupants were classed as "licensees" due to the lack of exclusive occupation of the property and that the new deposits had not been directly paid to the landlord (remember, the initial deposit was, but then replacement tenants would pay vacating tenants their "share" of the deposit to take over).

The Appeal

The tenants appealed the original judgement, and it was at this appeal in which the Judge found that each "churn" of tenant meant that a new tenancy was entered into, and as the landlord was aware of the changes and "churn" of tenants, there was a surrender of the initial tenancy. This of course meant that the deposit previously held should have been protected once the Deposit Protection Regulations were introduced in 2004, and a new Assured Shorthold Tenancy Agreement should have been offered to the tenants. In conjunction, the tenants should have received the relevant prescribed information and protection certificate.

As a result, the landlord was ordered to pay over £3,600.00 to the tenants, equating to over £1,200 for each "churn" which took place. Judge Luba QC noted that the landlord had not intentionally avoided his obligations under the Deposit Protection Regulations, and this justified passing the lightest possible penalty.

What this means for Landlords?

Many landlords will have tenancies which have been ongoing for a number of years, where there have been numerous "churns" of tenants – when one tenant vacates and is replaced with another, but the landlord will not have negotiated, offered or entered into a new Tenancy Agreement, nor would they have amended and re-protected the deposit. Landlords will now need to take action immediately, to avoid any court action.

For further advice on this topic or if you require any assistance, contact our Lettings Specialist team on 0161 511 5339 or complete our contact form.