With the increased amount of Section 21 Notices being served on tenants we are noticing a high number of issues surrounding tenancy deposits. As a result of this landlords are facing claims for damages and difficulties recovering possession.
The Tenancy Deposit Scheme (TDS) came into force on 6th April 2007. The scheme provides regulations that landlords must follow when receiving deposits from their tenants.
Section 213 Housing Act 2004 (as amended by the Localism Act 2011) requires that landlords should protect a tenancy deposit received in connection with an Assured Shorthold Tenancy within 30 days of receipt. The landlord must place the deposit within any one of the three government schemes and provide the tenant with the prescribed information in relation to the tenancy deposit.
Prescribed information- In the case of Suurpere v Nice  1 WLR 1224 the Court of Appeal held that the obligation for a landlord to provide to the tenant prescribed information is just as important as having to protect the deposit!
- Protect the deposit within a government scheme within 30 days of receiving it and,
- Provide the tenant with the prescribed information about the scheme used.
Failure to comply?
If the landlord fails to comply with any of these obligations they will be sanctioned.
1.The tenant is entitled to seek the return of the deposit and an order that the landlord pay no less than the amount of the deposit and no more than 3 times the amount of the deposit within 14 days of the order being made.
2.This also forfeits the landlord’s right to rely on a Section 21 Notice until the tenants deposit has been returned in full, or deductions are made that have been agreed between the parties or ordered by the Court.
Tenants are able to make claims from the 31st day after their deposit has been paid.
Great news for tenants! However, many of our clients are not even aware of the statutory tenancy deposit scheme, their rights and their landlord’s obligations.
An important thing to remember is that in order to mitigate the harshness of this provision the Court has discretion over the amount of compensation awarded according to section 214.
What does that mean?
The Court can take into account whatever factors they like when determining the amount of compensation the landlord must pay. The Courts are able to restrict the amount of compensation awarded, this is dependant upon the circumstances of each case. The Court can order the landlord to pay up to 3 times the amount of the tenancy deposit.
The purpose of the Localism Act was to sanction Landlords who failed to comply with the regulations. Late protection was never acceptable! It now appears that late protection rather than no protection is a significant factor that the Courts are considering when granting an award of compensation.
Inexperienced landlords have sometimes escaped the maximum penalty. Courts tend to be much stricter with professional landlords who should be fully aware of their duties. We must remember that ignorance is never an excuse!
If you are a tenant renting in the private sector with an Assured Shorthold Tenancy please consider your documents and check that your deposit has been protected. Check that you have received the prescribed deposit information. There are risks if you take action at this stage but you can take Court action to recover your deposit and claim compensation when your tenancy ends.
If your tenancy is in the process of ending, this information may be the difference between you defending possession proceedings and issuing a counterclaim for the recovery of your deposit and compensation or being ordered to leave your home by the Court.
If your tenancy has already ended, you can make a claim at Court for compensation. You can also ask the Court to make an order that your landlord returns your deposit to you, if they have not already done so. You must start your case at Court within six years of your tenancy expiring.
For more advice and assistance please contact our specialist housing law team on 0175 321 6399.
By Kimberley White, graduate paralegal