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Tenancy deposits - information is the key

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Any landlord who takes deposits from tenants will be familiar with the need to protect the deposit in one of the approved tenant deposit schemes. Most landlords are aware of the strict requirements to protect the deposit within 28 days of receipt, and to provide the tenant with information about the deposit; including where it is protected, how it will be released and so on.

Historically the Courts have taken a strict approach against landlords who have failed to protect tenants’ deposits, and there is no evidence at present that the changes brought in by the Localism Act 2011, in force from April 2012, will weaken the approach.

Up until now it has been unclear how the Courts would interpret the legislation against a landlord who had protected the deposit and provided some but not all of the required information to the tenant.

A recent Court of Appeal decision found that a landlord who had protected the deposit and given the tenant some but not all of the required information had failed to substantially comply with the requirement to give the tenant information. The landlord had not given the tenant information on; the return of the deposit; what to do if the landlord can not be contacted; what to do if the landlord and tenant could not agree on the amount to be returned; and what facilities were available for the resolution of any dispute without recourse to litigation.  The landlord contended that this was information which the tenant could have found out.  However the Court of Appeal interpreted the legislation strictly and found that these were not simply minor procedural matters. The landlord was penalised by being ordered to pay the tenant three times the amount of the deposit.

The amendments to the Housing Act 2004 brought about by the Localism Act 2011 did not apply, and it may be that future cases will see lesser penalties. However landlords clearly need to be aware that they should comply with all of the legislation and it is risky to miss out any of the prescribed information. 

Landlords who take deposits from tenants who are not familiar with tenancy deposit schemes should take legal advice at the soonest opportunity.

By associate solicitor, Louise Hebborn