At the beginning of a residential tenancy, it is common for landlords to take a deposit from their tenants as security for the tenant’s obligations under their tenancy agreement, however, the deposit continues to belong to the tenant after it has been paid to the landlord and there are strict obligations on the landlord in respect of their dealings with this money.

Within this article, we will explore the obligations on the landlord in circumstances where a deposit has been paid on or after 6th April 2012 only.

Landlord’s Obligations

If a landlord takes a deposit, they must ensure that, within 30 days of having taken the deposit, they:

1. Pay the money into an authorised Tenancy Deposit Scheme; and
2. Give the tenant what is known as the ‘Prescribed Information’.

The Prescribed Information that must be provided to the tenant, includes:

1. The name, address, telephone number, email address and any fax number of the scheme administrator of the authorised scheme;
2. Any information contained in any leaflets supplied by the scheme administrator to the landlord which explains the operation of the scheme.
3. The procedures that apply to how the deposit is to be repaid to the tenant at the end of the tenancy
4. The procedures that apply if either the landlord or the tenant cannot be contacted at the end of the tenancy;
5. The procedures that apply where the landlord and the tenant are in dispute as to the amount of the deposit to be repaid to the tenant at the end of the tenancy;
6. The facilities available under the scheme for enabling a dispute in relation to the deposit to be resolved without the need for litigation; and
7. Information relating to the tenancy for which the deposit has been paid, to include

a. The amount of the deposit;

b. The address of the property to which the tenancy relates;

c. The name, address, telephone number and any email address or fax number for the landlord;

d. The names, address, telephone number and any email address or fax number for tenant (including any other details that can be used by the landlord or the scheme administrator to contact the tenant at the end of the tenancy;

e. The name, address, telephone number and any email address or fax number of any other relevant person;

f. The circumstances when all or part of the deposit may be retained by the landlord by reference to the terms of the tenancy agreement; and

g. Confirmation that the information provided is accurate to the best of the landlord’s knowledge and belief; and

h. Confirmation that the landlord has given the tenant the opportunity to sign any document containing the above information to confirm that the information is accurate to the best of their knowledge and belief.

If you are a landlord and you have concerns about this then you can speak to your chosen deposit scheme as they may have template documents in place to ensure that you have supplied all of the required information.

Sanctions 

If the landlord does not take steps to protect the deposit in a Tenancy Deposit Scheme and/or does not give the Prescribed Information or does either of these things outside of the required 30 days then this could have serious consequences for them.

Where a tenant’s deposit has not been properly protected, or they have not been given the Prescribed Information then this gives rise to a claim by the tenant before the County Court which could see the landlord ordered to pay the deposit back plus three times the deposit value. In addition, it is likely that the landlord could be ordered to pay the tenant’s cost of the claim too.

Further, the landlord could face difficulty should they ever want to bring the tenancy to an end. In particular, if the landlord has not complied with their obligation to protect the deposit or provide the Prescribed Information then they will be unable to validly serve a section 21 notice (being the current no fault route of gaining possession) and use the accelerated possession procedure.

In addition, if a landlord is reliant upon a tenant’s failure to pay rent for at least two months as a mandatory ground for possession then there is a risk that a counterclaim from the tenant could see the level of rent owed offset against the tenant’s claim which could reduce the sum owed below the mandatory threshold. In these circumstances, the landlord will be reliant upon the discretion of the Court when determining whether possession should be granted.

Whilst it remains to be seen what changes will ultimately be made to the landscape of possession proceedings, it is anticipated that the above rules will remain in place to safeguard the tenant’s money and may remain a prerequisite to taking back possession of the property.

It is therefore extremely important that landlords get this right at the beginning of any tenancy where a deposit is to be paid to avoid any problems arising further down the line.

If you would like advice in relation to any dispute arising from a residential tenancy, please contact Louise Palmer on 01543 267231 or by email at lpalmer@ansons.law.