Advance rent = deposit??

Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.

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There is a report of a new tenancy deposit case on the Nearly Legal website. Although this is a County Court decision and therefore cannot bind Judges in future cases, it is interesting, and may be worrying for many landlords.

It appears that in this case there was a dispute as to whether the deposit money was actually a deposit or ‘future rent’ as alleged by the landlord. The Judge decided that the regulations say that any money paid (although in this case it was money from a former deposit paid to the same landlord in respect of a previous property) will be deemed to be paid as security, and therefore will be covered by the tenancy deposit regulations.

Many landlords have sought to evade the tenancy deposit regulations by taking two months rent in advance instead of one month in advance and a deposit. This case implies that this strategy may be more risky than has previously been thought, as if the Judge finds that in fact the payment was a deposit, the landlord will be liable for the penalty ‘fine’ of three times the deposit amount.

For more information about this case, read the Nearly Legal Report.