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The multiple deposit penalty claim question

View profile for Sophie Chilstone
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What is a rent repayment order and can I defend it?

A recent case has dealt with the issue of how many deposit regulation breaches can be claimed for in respect of the same deposit. In this case, the landlords entered a 12 month fixed term tenancy with the tenants which then turned into a statutory period tenancy. A deposit was paid to the landlords at the start of the fixed term however, the landlords failed to protect this within 30 days of receipt.

The tenants sought two penalties - one for the initial tenancy agreement and one for the statutory periodic tenancy arguing that, the deposit was classed as being received again at the start of the periodic tenancy arising. This stance came from the previous case of Superstrike Limited v Rodrigues which was the authority for a statutory periodic tenancy being a new tenancy on which the obligation to protect arose again and the deposit previously received to be treated as received again.

The judge in the first instance rejected this claim on the basis that the landlords had only failed to protect the deposit in the first 30 days of receipt and that this was not considered received again when the tenancy became periodic. The judge therefore, awarded a penalty of three times the deposit for a single breach.

The tenants appealed this decision and they were awarded three times the deposit for the first breach and two times the deposit of the second breach. The landlord was also ordered to return the original deposit. The reason that the appeal judge made this decision was because, if the landlord had protected the deposit within 30 days of receipt, this would not have needed to be protected again when the tenancy became periodic as this would not have been classed as being received again. However, as the landlord failed to protect the deposit initially within 30 days of receipt, the periodic tenancy was classed as a new tenancy and therefore, the deposit was received again.

It is important that landlords ensure they protect the deposit within 30 days of receipt and serve the deposit prescribed information within 30 days. However, should landlords fail to do this, they must return the deposit during the fixed term (before the tenancy agreement becomes statutory periodic) to limit any deposit claim to only one breach of the regulations.

Our specialist landlord and tenant solicitors can assist residential landlords with a range of matters including their responsibilities as a landlord. Contact our team today on 0161 696 6170.