Any deposit received after 6th April 2007 must be protected under a government approved scheme within 14 days of receipt by the landlord or the landlord’s agent. There are currently three providers, namely:
•Deposit Protection Service (DPS)
•MyDeposits
•Tenancy Deposit Scheme (TDS)
The landlord must have also served prescribed information within 14 days.
Failure to protect a tenancy deposit or serve prescribed information allowed a tenant to claim from the landlord an amount equivalent of 3x the deposit. A landlord was also prohibited from serving a section 21 notice requiring possession if the deposit monies were not protected at the time of the intended service of the s.21 notice.
Various cases followed the implementation of the tenancy deposit rules such as Draycott v Hannells Lettings Ltd [2010] EWHC 217 (QB), Tiensia v Vision Enterprises Ltd [2010] EWCA Civ 1224, Hashemi v Gladehurst [2011] EWCA Civ 604, and Potts v Densley & Pays[2011] EWHC 1144 (QB). These cases decided that as long as the deposit was protected and the prescribed information served before the hearing (not 14 days after receipt), or the tenancy had already come to an end before the claim was issued then no order could be made against the landlord for an amount of 3x the deposit.
However the law has recently been amended. Any deposits received after 6th April 2012 will now be subject to the new provisions on the Housing Act 2004 as amended by the Localism Act.
The period within which the landlord must protect the deposit in an authorised scheme has been extended from 14 days to 30 days. Once the deposit has been protected, the landlord also has to serve prescribed information upon the tenant; this is information as to how the tenancy has been protected and how he tenant can recover it at the end of the tenancy. The deadline for the provision of this information has also been extended from 14 to 30 days. As before, all deadlines begin to run from the date the deposit is received by the landlord.
Furthermore the courts have discretion to order the landlord to pay between 1x and 3x an amount equivalent to the tenancy deposit. The restrictions upon serving a s.21 notice still apply although it would appear a valid notice cannot be served if a deposit is not protected and prescribed information served within the 30 day timescale.
Although the restrictions upon a landlord serving a s.21 notice seem rather inconsistent with the law – this could have the effect of turning what would otherwise be an AST into a fully assured tenancy (non-shorthold), there appears to be a "get-out". If the deposit is simply repaid to the tenant, then the restriction on the right to serve a notice to recover possession will not apply.
At Benchmark Solicitors we can assist in landlord repossession actions and assist landlords to recover their property or tenants to stay in their home. We offer fixed fees for this work, please see our fixed fee page for more details.
Paul Rogers, Solicitor – 20th June 2012