September 25, 2023

implications landlords failure protect tenants deposit

The Implications Of A Landlord’s Failure To Protect A Tenant’s Deposit

<p>Many landlords choose to serve a “Section 21 Notice” as a route to evict a tenant from residential lettings.</p> <p>The reason is because the landlord is not required to establish any prescribed grounds under Schedule 2 of the Housing Legislation or “fault” on part of the tenant.</p> <p>Get the procedure right and the associated costs to recover possession of the property is relatively inexpensive.</p> <p>However, get the procedure wrong, and it is likely to lead to potential lost rental income, not to mention extra costs to put things right.</p> <p>Frequently, the Dispute Resolution Team at DWS are called in to untangle thorny knots that landlords often get themselves into as a result of overlooking certain criteria.</p> <p>If you are landlord or a letting/management agent then this article is for you.</p> <p><u>Protection of a Tenants Deposit</u></p> <p>A landlord (or their agent) must place a tenant’s deposit in a Government/Tenancy Deposit Scheme if the property is rented out on an Assured Shorthold Tenancy (AST) that started after the 6 April 2007.</p> <p>In England and Wales, the deposit can be registered with any of the following deposit schemes:</p> <p>If there is a dispute at the end of the tenancy regarding the return of the deposit (or deductions from it) then the scheme will decide to whom the deposit (in full or in part) should be returned.</p> <p><u>Timescales</u></p> <p>For tenancies commencing from the 6 April 2012 onwards, the landlord has up to 30 days to protect the deposit in one of the approved schemes. For tenancies commencing before the 6 April 2012 (and not renewed), exceptions may apply.</p> <p>The landlord also has 30 days to provide a tenant with information regarding the protection of the deposit and other information known as “prescribed information”.</p> <p><u>Consequences of failing to protect the tenants deposit</u></p> <p>If a landlord or agent has failed to protect the tenants deposit then there are two main consequences; both of which are significant.</p> <p><u>Compensation </u></p> <p>As a penalty for failing to protect the deposit a landlord can be ordered by the court to return the deposit to the tenant, as well as paying the tenant up to three times the amount of the deposit as compensation.  The amount that is ordered by way of compensation can vary dependent upon the circumstances.</p> <p><u>Invalid Section 21 Notice </u></p> <p>If you fail to protect the deposit, the Section 21 Notice will not be valid. A tenant cannot be evicted without a court order. In reality, this is likely to mean that a landlord will have difficulty in evicting a tenant unless certain grounds can be established under Schedule 2 of the Housing Act 1998.  Any attempt to evict a tenant without a court order may lead to claims for unlawful eviction by the tenant and a landlord may face the prospect of being ordered to pay compensation to the tenant, a fine and/or imprisonment.</p> <p><u>Can a valid Section 21 Notice still be served if the deposit if protected late?</u></p> <p>Many landlords pay little attention to this point. Quite simply the answer is no.</p> <p>Under the current rules, if a tenant’s deposit is protected late (after the 30 day period), then late protection of the deposit does not remedy the breach.</p> <p>Once it’s late, it’s <u>too</u> late.</p> <p>We have come across many instances where Landlords fail to appreciate this point and press ahead to court in the <em>vain </em>hope pursuing eviction proceedings through the Section 21 procedure. However, this can only serve to make matters more complicated.</p> <p>To discuss how to deal with the problem, other criteria that you must meet, alternative remedies, strategy, damage limitation, or any issues concerning landlord and tenant matters, please contact the dispute resolution team at DWS Legal on 0116 2999 199 or</p>
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