April 2012 New Deposit Law Penalties and Fines

Tenancy Deposit Law Changed 6th April 2012 (see Localism Bill) -In summary - Fail to protect the Deposit within 30 days and or fail to issue the PRESCRIBED INFORMATION the Tenant can sue for you for up to six years for the deposit and ALSO up to three times the deposit value. Also a Notice to Vacate would be invalid. Some Tenants will use this, to delay eviction or sue you. All they have to do is answer no to Question 8 on the Tenant Defence Form

New Deposit Protection Rules April 2012

You MUST have Protected a Deposit within 30 days (no longer 14 days)
You MUST have issued PRESCRIBED INFORMATION and additional deposit information to the Tenant any other person who provided such deposit within 30 days (no longer 14 days)

If you have failed to comply with 1& 2 THE TENANT HAS SIX YEARS TO SEEK MANDATORY compensation

Options

Protect the Deposit late in a scheme but to mitigate (reduce) a claim some may argue return the deposit (for a Judge can still award compensation (from one to three times the amount). Warning your possession claim may be overturned and set aside if appealed - see warning
Return the Deposit in FULL to the Tenant in full (or deductions only with Tenants' written consent) OTHERWISE NO Section 21 Notice can be relied on until the court awards damages being ; return the deposit or and fine not more than three times the value of the deposit.
A former Tenant will have up to six years after the end of the Tenancy to apply to court and sue the Landlord for the return of the deposit and be awarded compensation of not more than three times the value of the deposit.
If you have failed to comply there is no escape you CANNOT evict your Tenant using the Section 21 Notice for will be unable to provide a valid answer Question 7 of the Section 21 application form for possession form
Caution all the Tenant has to do to nullify a claim for possession and seek compensation is claim that they never received the deposit information (see Question 8 of the Tenant Defence Form)

These changes benefit the Tenant and not the Landlord

Where the Landlord had previously failed to comply with Deposit Protection within 14 days the Tenant could seek compensation, but the Landlord could simply protect prior to a court hearing; this would nullify the Tenants claim(case law Universal Estates v Tiensia.) Whereas the revised Legislation non compliance is definitive and punitive

All changes to the 2004 Housing Act are below in red

213 Requirements relating to tenancy deposits

(1)Any tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time when it is received, be dealt with in accordance with an authorised scheme.

(2)No person may require the payment of a tenancy deposit in connection with a shorthold tenancy which is not to be subject to the requirement in subsection (1).

(3)Where a Landlord receives a tenancy deposit in connection with a shorthold tenancy, the initial requirements of an authorised scheme must be complied with by the landlord in relation to the deposit within the period of 14 days (changes to 30 days) beginning with the date on which it is received.

(4)For the purposes of this section “the initial requirements” of an authorised scheme are such requirements imposed by the scheme to be complied with by a Landlord on receiving such a tenancy deposit.

(5)A Landlord who has received such a tenancy deposit must give the Tenant and any relevant person such information relating to—

(a)the authorised scheme applying to the deposit,

(b)compliance by the Landlord with the initial requirements of the scheme in relation to the deposit, and

(c)the operation of provisions of this Chapter in relation to the deposit, as may be prescribed.

(6)The information required by subsection (5) must be given to the Tenant and any relevant person—

(a)in the prescribed form or in a form substantially to the same effect, and

(b)within the period of 14 days (changes to 30 days) beginning with the date on which the deposit is received by the Landlord.

(7)No person may, in connection with a shorthold tenancy, require a deposit which consists of other property than money.

(8)In subsection (7) “deposit” means a transfer of property intended to be held (by the Landlord or otherwise) as security for—

(a)the performance of any obligations of the Tenant, or

(b)the discharge of any liability of his, arising under or in connection with the tenancy.

(9)The provisions of this section apply despite any agreement to the contrary.

(10)In this section—

· “prescribed” means prescribed by an order made by the appropriate National authority;

· “property” means moveable property;

214 Proceedings relating to tenancy deposits

(1)Where a tenancy deposit has been paid in connection with a shorthold tenancy, the Tenant or any relevant person (as defined by section 213(10)) may make an application to a county court on the grounds—

(a)that the initial requirements of an authorised scheme (see section 213(4)) have not, or section 213(6)(a) has not, been complied with in relation to the deposit; or being replaced with (a) that section 213(3) or (6) has not been complied with in relation to the deposit, or”.

also being added also applies in a case where the tenancy has ended, and in such a case the reference in subsection (1) to the tenant is to a person who was a tenant under the tenancy.”

(b)that that they been notified by the Landlord that a particular authorised scheme applies to the deposit but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.

(2)Subsections (3) and (4) apply if on such an application will be replaced with “in the case of an application under subsection (1) if the tenancy has not ended and”, the court—

(a)is satisfied that those requirements have not, or section 213(6)(a) has not been complied with, in relation to the deposit, or to be replaced with “(a) is satisfied that section 213(3) or (6) has not been complied with in relation to the deposit, or

(b)is not satisfied that the deposit is being held in accordance with an authorised scheme, as the case may be.

(7) After subsection (2) insert—

NEW SECTION & DEFINITIONS

Subsections (3A) and (4) apply in the case of an application under subsection (1) if the tenancy has ended (whether before or after the making of the application) and the court—
(a) is satisfied that section 213(3) or (6) has not been complied with in relation to the deposit, or

(b) is not satisfied that the deposit is being held in accordance with an authorised scheme, as the case may be.” new section ends

(3)The court must, as it thinks fit, either—

NEW SECTION & DEFINITIONS The court may order the person who appears to the court to be holding the deposit to repay all or part of it to the applicant within the period of 14 days with the date of the making of the order

(a)order the person who appears to the court to be holding the deposit to repay it to the applicant, or

(b)order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme, within the period of 14 days commencing from the date of the making of the order.

(4)The court must also word "Also" will be removed order the Landlord to pay to the applicant a sum of money equal to will be replaced with "not less than the amount of the deposit and not more than three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.

(5)Where any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section 213(7), the property in question is recoverable from the person holding it by the person by whom it was given as a deposit.

NEW

(6)In subsection (5) “deposit” has the meaning given by section 213(8).

215 Sanctions for non-compliance

Now termed as "prevention of service of notice under section 21 of the
Housing Act 1988"

(1)If a tenancy deposit has been paid in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy at a time when—

(a) new "Subject to subsection (2A)" the deposit is not being held in accordance with an

authorised scheme, or

(b)the initial requirements of such a scheme (see section 213(4)) have not been complied with in relation to the deposit. be replaced with "section 213(3) has not been complied with in relation to the deposit.”

(2)NEW Subject to subsection (2A). If section 213(6) is not complied with in relation to a deposit given in connection with a shorthold tenancy, no section 21 notice may be given in relation to the tenancy until such time as section 213(6)(a) is complied with.

NEW SECTION 2A

(2A) Subsections (1) and (2) do not apply in a case where—

(a) the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant, or

(b) an application to a county court has been made under section 214(1) and has been determined by the court, withdrawn or settled by agreement between the parties.”

ENDS

(3)If any deposit given in connection with a shorthold tenancy could not be lawfully required as a result of section 213(7), no section 21 notice may be given in relation to the tenancy until such time as the property in question is returned to the person by whom it was given as a deposit.

(4)In subsection (3) “deposit” has the meaning given by section 213(8).

(5)In this section a “section 21 notice” means a notice under section 21(1)(b) or (4)(a) of the Housing Act 1988 (recovery of possession on termination of shorthold tenancy).

The Deposit Schemes are managed in accordance with SCHEDULE 10 of this ACT.

CHANGE In Schedule 10 (provisions relating to tenancy deposit schemes) in paragraph
5A(9)(b) (modification of section 213(3)) for “14” substitute “30”.

The changes will affect all tenancies commencing. For the "Right to Evict" will only be granted if the Deposit Legislation had been complied with