Tenancy Deposits

Tenancy Deposits

A tenancy deposit scheme safeguards tenancy deposits paid in connection with shorthold tenancies. Landlords commonly require tenants to pay a deposit, as security for any damage that the tenant may do to the property. One purpose of the Act was to provide security to tenants, since in some cases landlords have failed to return the tenant’s deposits at the end of tenancies in circumstances when they have no right to retain it.

The tenancy deposit scheme only applies to assured shorthold tenancy agreements.

The tenancy deposit legislation refers to “where a landlord receives a tenancy deposit” must comply with the requirements of the tenancy deposit scheme. However, the word “landlord” for the purpose of the Act includes an agent (anyone acting on behalf of the landlord) [1].

Agents who receive and hold tenancy deposits on behalf of landlords must comply with the requirements of the tenancy deposit scheme. There are two requirements of the tenancy deposit scheme, they are:

  • Tenancy deposits must be protected with a government authorised tenancy deposit scheme within 30 days of the tenancy deposit having been paid [2].
  • The prescribed information relating to the tenancy deposit must also be provided to the tenant (and any third party who paid the tenancy deposit) also within 30 days of the tenancy deposit having been paid [3].

Consequences of Non-Compliance

There are two consequences for failing to comply with the requirements of the tenancy deposit scheme, they are:

  • A tenant may claim from 1-3 times the value of the tenancy deposit [4].
  • No section 21 notice can be served.

The restrictions on serving a section 21 notice is only lifted if the tenancy deposit is returned to the tenant (or third party who may have paid the tenancy deposit) or where a court have made a determination under s.214 of the Housing Act 2004 [5].

Protecting the tenancy deposit late (outside of the 30 days’ requirements) will not rectify the breach.

[1] s.212(9)(a) of the Housing Act 2004

[2] s213(1) of the Housing Act 2004

[3] s213(6) of the Housing Act 2004

[4] s214(4) of the Housing Act 2004

[5] s215(2A) of the Housing Act 2004

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