Under the Housing Act 2004 (the "Act") every landlord or letting agent that takes a deposit for an Assured Shorthold Tenancy in England and Wales must place that deposit in a Tenancy Deposit Scheme. (Section 213 Housing Act 2004).
Once in receipt of the deposit it is necessary for the Landlord or Managing Agent to place the deposit in a scheme within 14 days and the Landlord must give the tenant information with regard to the scheme within the same time period (the "Obligations"). (section 213(3) and (6) of Housing Act 2004)
The Act states that if a Landlord or Managing Agent fails to carry out their Obligations under the Act, the Tenant can claim three times the amount of the deposit (section 214(4) from the Landlord, however it has taken a recent Court of Appeal decision to clarify how a tenant can make a successful compensation claim.
In Tiensia v Vision Enterprises Limited (t/as Universal Estates) and Honeysuckle Properties v Fletcher McGrory and Whitworth it was decided that for the Court to order the Landlord to pay the compensation to the Tenant, the Landlord must have failed to comply with either of those obligations as at the date of the hearing.
In other words, the Landlord can pay the deposit into the Tenancy Deposit Scheme and supply the information to the Tenant the day before the hearing, long after the original 14 day timeframe and the Landlord would then have a complete defence to the Tenant's claim for compensation.
The Act does however protect tenants in other ways where there has been non-compliance by a Landlord, such as restricting a Landlord's ability to obtain possession of the property.
It is an area where both landlords need to be careful and comply at the outset with all requirements under the Act and tenants need to know where they stand if compliance has not taken place.
Should you need advice regarding the scheme please contact Tony Parkins our Landlord and Tenant Specialist.
Our solicitors have years of expertise in dealing with all issues related to the tenancy deposit scheme. Our offices are based in Birkenhead, Wirral and we also take on clients from the wider Liverpool, Merseyside and Cheshire area.