Landlords Failing To Protect Their Tenants’ Deposits

Residential landlords should be aware that there has been a change to the deadline within which they must protect their tenant’s deposit within a tenancy deposit scheme. The deposit must now be protected within a period of 30 days from receiving payment, rather than the previous requirement of 14 days, and further the Prescribed Information should be served on the Tenant within that same timescale.

This does provide a longer time frame within which to register the deposit, however harsher sanctions are now be imposed should a landlord fail to register a tenant’s deposit.

Under s.21 of The Housing Act 1988 a landlord is permitted to serve a notice giving two months’ notice to the tenant to end an Assured Shorthold Tenancy and to recover possession of the dwelling-house. This “s.21 notice” is a very valuable tool when seeking to recover possession but it can only be issued by the landlord if the deposit is protected within the 30 day limit.

Previous legislation allowed for the landlord to serve this s.21 notice even if the deposit was not protected within the preliminary 14 day deadline. This meant that the deposit could be registered at any point in the tenancy, and a s.21 notice issued forthwith.

However, the new 30 day deadline for protection of the deposit is now absolute. Essentially, the landlord cannot serve a s.21 notice, at any point within the tenancy, if the deposit is not protected within 30 days of receipt of the deposit payment.

The only way to get back the ability to serve a s. 21 Notice is to return the full deposit sum to the tenant beforehand.

In addition, if the deposit is not protected, the tenant will be able to apply to the court seeking an order that the landlord pay a penalty for non-compliance, which is valued at between one and three times the amount of the deposit.

We advise you to ensure that you seek advice on what is required before entering into a tenancy.