4 April 2024

Safeguarding tenancy deposits

By Vikki Ridgway, CILEX Lawyer, Hayes + Storr.

Before a new tenancy of a residential property begins, it is usual for a landlord to require that a deposit is paid by the tenant. This is to give some protection against any damage caused to the property during the period of the tenancy or as payment towards any rent arrears or other fees that may arise.

Taking a deposit is common, however, there are statutory requirements that landlords must comply with, otherwise they may be prevented from issuing a Section 21 Notice in future.

Deposit Protection

For all assured shorthold tenancies (AST) where deposits are required, landlords are obliged to protect them in an appropriate tenancy deposit scheme. If the deposit was paid after 6th April 2012, it must be protected within 30 days of the funds having been received. Different time limits applied before this date; therefore, specific advice should be sought for earlier tenancies.

There are three government approved schemes which landlords may use to protect tenancy deposits; these include:

1. Tenancy Deposit Scheme
2. Deposit Protection Service
3. MyDeposits

Once the deposit has been protected in an appropriate scheme, the landlord is obliged to provide the tenant with information relating to the tenancy deposit. This includes, but is not necessarily limited to:

• The contact details of the scheme administrator the deposit has been protected with.
• The contact details of the landlord.
• The contact details for the tenant at the end of the tenancy.
• The procedures for repayment of the deposit at the end of the tenancy.
• The procedures which will apply if there is a dispute about the amount to repay at the end of the tenancy.

Consequences of failure to protect

There are sanctions which will apply if a landlord fails to protect the deposit and/or provide the prescribed information, either on time or at all. Under section 214 of the Housing Act 2004, the tenant can bring a claim for a sum representing one to three times the value of the tenancy deposit as a result of the landlord’s failure. The exact sum awarded will be decided by the court, taking into account the circumstances of the failure and how severe the breach is deemed to be; however, this could equate to a sizeable sum.

In addition to the above, section 215 of the Housing Act 2004 makes it clear that where a tenancy deposit has been paid, no valid section 21 Notice may be served when the deposit is not being held in an authorised scheme, or where the prescribed requirements have not been complied with.

How can we help?

If you are a landlord, or a tenant, and you’re concerned that these requirements have not been met in relation to your tenancy agreement, please call 01553 778900 and ask to speak to Vikki Ridgway. We can offer all new clients a complimentary telephone consultation of up to a maximum of 30 minutes.