The Court of Appeal has made a landmark ruling,
decreeing that the payment of rent in advance
does not count as a deposit.
The decision comes from the case of Johnson vs.
Old, which has been rumbling its way through
the labyrinthine judicial system for some time now.
In this case, a tenant was offered a six month
tenancy. As she did not receive a set income, she
was asked for the full six months' rent in advance.
A semantic complication was added by the
contradictory drafting of the tenancy agreement, which
asked for six months' rent in advance, but also
stipulated that rent was to be paid monthly.
The tenant, Anne Old, took her landlords to court
when they attempted to serve a Section 21
notice to claim possession of the property. Her
argument, that she had already paid a deposit (the
six months' rent) was initially victorious; however
at a second hearing her landlord successfully
challenged this. The tenant then acquired legal aid
to appeal the latter decision. This week's decision
from the Court of Appeal was the third and final
appearance of the case, and ruled in the landlord's
favour.
Old's payment ruled to be rent in advance, not
deposit
The Court asked Ms Old how she would have reacted
if asked to pay rent for one of the six months,
having already made the initial six-month payment.
Old's reply, that she would have considered
herself to have already paid for that month's rent
with the initial payment, was deemed to be crucial
in the Court's decision. They ruled that this
proved that the payment which Old had made was
functioning as rent for the property, and not a
deposit.
The case has been seen as opening the door for
landlords and agents to accept rent in advance
without worrying that it will be subject to the
same legal requirements as a deposit.
Steve Harriott, chief executive of the Tenancy
Deposit Scheme, said: "This is a very helpful
clarification of an issue which has been concerning
landlords and agents.
"The judgement in this Court of Appeal case should
assist those landlords and agents who want
to ask for rent in advance and who can be reassured
that this is not a tenancy deposit that needs
protecting under the Housing Act 2004."
In May, the Court of Appeal made a landmark ruling,
decreeing that the payment of rent in advance does not
count as a deposit.
The decision came from the case of Johnson vs. Old, which
had been rumbling its way through the labyrinthine judicial system
for a significant amount of time. In this case, a tenant was
offered a six-month tenancy. As she did
not receive a set income, she was asked for the full six months'
rent in advance.
A semantic complication was added by the contradictory
drafting of the tenancy agreement, which asked for six months' rent
in advance, but also stipulated that rent was to be paid
monthly.
The tenant, Anne Old, took her landlords to court when they
attempted to serve a Section 21 notice to claim possession of the
property. Her argument, that she had already paid a
deposit (the six months' rent) was initially victorious; however at
a second hearing her landlord successfully challenged this.
The tenant then acquired legal aid to appeal the
latter decision. This week's decision from the Court
of Appeal was the third and final appearance of the case, and ruled
in the landlord's favour.
Old's payment ruled to be rent in advance, not
deposit
The Court asked Ms Old how she would have
reacted if asked to pay rent for one of the six months, having
already made the initial six-month payment.
Old's reply, that she would have considered
herself to have already paid for that month's rent with the initial
payment, was deemed to be crucial in the Court's decision.
They ruled that this proved the payment, which
Old had made, was functioning as rent for the property, and not a
deposit.
The case has been seen as opening the door for landlords and
agents to accept rent in advance without worrying that it will be
subject to the same legal requirements as a deposit.
Steve Harriott, chief executive of the Tenancy Deposit
Scheme, said: "This is a very helpful clarification of an issue
which has been concerning landlords and agents.
"The judgement in this Court of Appeal case should assist
those landlords and agents who want to ask for rent in advance and
who can be reassured that this is not a tenancy deposit that needs
protecting under the Housing Act 2004."
