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Latest News - January 2011
Tenancy Deposit Protection Scheme
The Housing Act 2004 introduced the Tenancy Deposit Regulations.
They provide that having received the deposit from the Tenant the Landlord is required to protect that deposit with a Government Authorised Tenancy Deposit Scheme.
Thereafter they must serve upon the tenant notice giving specific information regarding this. At the end of the tenancy the Landlord checks the property and makes deductions from the deposit for any damaged caused.
In the event the Tenant objects and the matter cannot be resolved the dispute is referred to an independent arbitration service. The deposit is then paid out in accordance with the arbitrator’s decision.
The scheme is not without problems however as Landlords inevitably do not want to pay over the deposits. The rules however deal with this and say that if the Landlord fails to protect the deposit within 14 days the tenant is entitled to take the matter to court and is entitled to a penalty of three times the deposit. In addition the Landlord is unable to serve notice on the Tenant seeking possession until the deposit has been protected.
A Court of Appeal decision earlier this year however has clouded the position in that the majority judgement indicates that that it is not the failure to protect the deposit within 14 days that is important but to protect it all.
Thus this new case law would appear to confirm that providing the deposit is protected by the date of any Court hearing, should the tenant take action then the Landlord would not be penalised. The reason given by the Court of Appeal for this was that they felt that the purpose of the law was to protect the Tenant and not punish the Landlord.
What is of course unclear is the position where it is only discovered that the deposit was not protected by the Landlord after the Tenant has vacated the property. The best approach in the case of a Landlord therefore would always be to protect the deposit at the very earliest opportunity and if at all possible within the 14 days.