Tenancy Deposit Schemes

Tenancy Deposit Scheme - Penalties to Landlords

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 sum in a Tenancy Deposit Scheme (Section 213 Housing Act 2004).

Once in receipt of the deposit, it is necessary for the property owner or Managing Agent to place it in a scheme within 14 days and the they must then 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).

For more information about tenancy deposit schemes and your rights, contact our team of experienced solicitors today on 0800 781 3894 or complete our online enquiry form.

Landlord's Failure to Carry Out Obligations

The Act states that if a Landlord or Managing Agent fails to carry out their obligations under the act, the resident can claim three times the amount of the deposit (section 214(4), 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.

Late Payments into the Tenancy Deposit Scheme

In other words, the owner of the property can pay the deposit into the Tenancy Deposit Scheme and supply the information to the renter the day before the hearing, long after the original 14 day timeframe and the landlord would then have a complete defence to the resident's claim for compensation.

The Act does, however, protect tenants in other ways where there has been non-compliance by a lease holder, such as restricting their ability to obtain possession of the property.

It is an area where 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 property law specialist.