Penalties for failing to protect a deposit and issue deposit information

Where a Landlord (or their Agent) fails to comply with the Deposit Legislation they are excluded from using the Section 21 Process Section 21 Process to evict their Tenants

The Penalties and Fines are as follows

 
 
  • No deductions can be made where a deposit has not been protected unless with the Tenants consent in writing  otherwise such would be unlawful.

Options

    • VERY IMPORTANT - Even though revisions contained within the Localism Act-imply you may Protect the Deposit in a scheme late. and irrespective of the fact the scheme allow you to protect the Deposit late by doing so DOES NOT entitle you to evict using the Section 21 Notice you MUST return to the Tenant IN FULL or make deductions with Tenants consent (in writing)
    • Warning two - we are ware of another case being contested with the counter claim the deposit must be protected in a scheme AND also monies should be returned to the Tenant
Warning Update AUGUST 2013 -
 
Two appeals upheld in Tenants favour - one at High Court [higher court] Landlords protected  deposits in a scheme late Tenant refusing to accept return of deposit and Landlord now excluded from evicting Tenants using Section 21 Notice.
 
Conclusion tenancy reverts to an Assured Tenancy and the Landlord has lost the right to evict using a Section 21 Notice. OPTIONS return deposit - re issue notice apply again

Should you have failed to comply with deposit protection within the 30 days period it may be wiser to return the deposit in full - We accept each case is unique so please call your members help line
 
 

IRRESPECTIVE of the fact you remedy the breach should the Tenant apply there is a mandatory COMPENSATION 

  • The courts have the power to order that the Landlord/Agentbe fined no less than 1 * the Deposit and no more than 3 * the Deposit (changes due to ammendments introduced by the Tenancy Deposits Section of the 2011 Localism Bill (Royal Assent on 15 November 2011)
  • The tenant has 6 years from the end of the Tenancy to seek compensation from you

Additional Guidance

  • RENEWING AST For clarity a Deposit is in respect of any Deposit specified on any AST issued after April 2007 this includes a renewal AST or letter of extension.
  • DEPOSIT INSURANCE If the Landlord insures their deposits then in the event of a Tenancy renewal a new insurance policy must have been purchased in respect of the replacing AST. The issuing of a further AST terminates the previous insurance. The courts are now able to verify such
  • If you have accepted more than one months' rent in advance - such as Two Months in Advance the courts may view this as [contrived] a Deposit by conduct and you may be denied possession

Why MUST I protect the deposit before I apply for a possession order?

Where a Landlord requests the courts to grant a possession order. The courts must satisfy themselves that the application complies with civil proceedure rules. This is acheived in part by the Landlord making a statement of truth on the court application form see Question 7 At the date of service of the Section 21 Notice: Download the application form for possession form.

(i) The deposit was held under a Tenancy Deposit Scheme (TDS) authorised under
Part 6 of the Housing Act 2004
(ii) The initial requirements of the TDS had been complied with in relation to the deposit.
(iii) The claimant had given the defendant and anyone who paid the deposit on behalf of the defendant the prescribed information in relation to the deposit and the operation of the TDS
 
The section below details the consequences and what you must do to remedy the situation before you can progress further
 

GOOD PRACTICE RE DEPOSIT INFORMATION

  • At any given time the Tenant can deny receiving the prescribed information, therefore it is wiser to ask the tenant to sign receipt of the prescribed information when you issue the Tenancy Agreement.
  • THE LANDLORD or Agent must supply the information - THE DEPOSIT SCHEMES DO NOT PROVIDE the prescribed information.
  • The Tenancy Deposit Legislation is changed April 2012 and defined the penalities for non compliance