A private landlord is contesting a substantial tenancy deposit penalty claim in the County Court, Bromley, arguing that payments labelled as deposits were in fact advance rent. The case raises important questions about the characterisation of tenancy payments and the application of recent legal precedents affecting multiple assured shorthold tenancies (ASTs).

Background to the Case

The landlord let a flat in East London from November 2019 to February 2025 under five successive ASTs. Instead of taking a traditional deposit, the landlord agreed with the tenant in October 2019 to accept advance rent due to the tenant’s limited funds during referencing. An email from October 2019 explicitly stated: “The deposit will go towards your advance rental payment.”

At the start of the second AST in October 2021, the landlord proposed a deposit scheme, but the tenant responded describing the payments as split advance rent instalments, to be returned if notice was served. The tenancy agreement signed shortly after labelled the payment as “Advance” with no deposit clause included. Notably, the payment was made five days before the contract was signed, which the landlord argues cannot constitute a deposit.

Key Evidence Supporting the Defence

Additional evidence includes a WhatsApp message from December 2019, two years before the alleged deposit claim, where the landlord confirmed no deposit had been taken and that the tenant had demonstrated clear funds. The tenant acknowledged this message. Furthermore, the final AST from November 2023 to November 2024 explicitly records £2,400 as two months’ advance rent with no mention of a deposit.

When the tenant vacated in March 2025, he requested the use of the alleged deposit to cover a rent shortfall, which the tenancy agreement explicitly prohibits if the payment was a deposit. The tenant’s own emails refer to the alleged deposit as £1,250, while the claim is for £1,200.

The Claim and Legal Arguments

The claim was initially issued under CPR Part 8 but has since been transferred to Part 7. The claimant’s solicitors, operating on a no-win-no-fee basis with a 25% fee, rely on the Superstrike v Rodrigues [2013] and Szorad v Kohli [2023] cases. They argue that a penalty applies to each of four ASTs, potentially amounting to £14,400.

The landlord’s primary defence invokes Johnson v Old [2013] EWCA Civ 415, which establishes that the function of a payment—not its label—determines its legal character. The landlord points to the WhatsApp admission, the tenant’s own description of payments as advance rent, the timing of payments before contract signing, and the absence of deposit clauses in all ASTs to argue the payments were not deposits.

Questions Raised by the Landlord

The landlord seeks insights on whether courts have accepted that the Superstrike penalty cannot apply if the payment is successfully characterised as advance rent rather than a deposit. Since the Superstrike argument assumes a deposit existed, a successful advance rent defence would negate the claim entirely.

Further questions include whether any defendants have defeated a Szorad multi-AST penalty claim using an advance rent defence, and how strong the advance rent argument is under Johnson v Old given the facts such as the WhatsApp message and pre-contract payment.

There is also uncertainty about court track allocation. The claimants argue the claim exceeds £10,000, warranting Fast Track, while the landlord’s counterclaim is £6,222.30. If the advance rent defence succeeds, the claim’s value drops to zero, raising questions about the appropriateness of Fast Track allocation based on theoretical maximums.

Finally, the landlord inquires about the use of Okadigbo v Chan to limit penalties to a single deposit equivalent and what facts have been persuasive in such cases.

What this means for landlords

This case highlights the critical importance of clear documentation and communication regarding tenancy payments. Landlords who accept advance rent in lieu of deposits should ensure agreements explicitly reflect this to avoid costly penalties. The case also underscores the evolving legal landscape around tenancy deposit protection and penalties, emphasising the need for landlords to understand recent case law such as Johnson v Old, Superstrike, Szorad, and Okadigbo.

For landlords facing similar claims, this case illustrates the potential to challenge the penalty by disputing the characterisation of payments as deposits. However, the complexity of multi-AST claims and track allocation issues suggests that legal advice and thorough preparation remain essential.

Source: Based on reporting from Property118

TLA Training Academy

The Landlord Association has launched its new Training Academy for UK landlords, providing structured guidance, compliance education, and practical knowledge to support landlords at every stage. Members can now complete the programme and become TLA Certified Landlords at no additional cost as part of their membership.

Landlords can explore the Academy here: https://landlordassociation.org.uk/tla-academy/

Those looking to join and access the full training and certification can register here: https://landlordassociation.org.uk/landlord-association-membership-uk/

TLA update

The Landlord Association is currently onboarding new service providers into its Trusted Partner Hub, a new initiative designed to support landlords, tenants, letting agents, and property managers with vetted, high-quality services. As one of the fastest growing landlord associations in the UK, TLA offers partners direct access to an engaged and active member base at the point of need. Service providers across legal, maintenance, insurance, finance, mortgages, tenant screening, and property services can register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/