Tenancy Deposits - Where we are now

Tenancy Deposits - Legal Update and Case Law

The provisions of the Housing Act 2004 relating to tenancy deposits came into force on 6 April 2007. The intention was to prevent residential landlords from taking deposits at the start of a tenancy and refusing to return it at the end even where the tenant had behaved impeccably.
It imposes obligations on landlords who let residential properties under Assured Shorthold Tenancy agreements and receive deposits.
1. They must register the deposit with one of three administrators; and
2. They are also required to specify where the deposit has been registered and provide this information to the tenant within 14 days of receiving the deposit.

 There are sanctions for failing to comply:-
1. A right for the tenant to claim three times the deposit; and
2. The landlord being prevented from serving notice to terminate the tenancy agreement.

The consequences of failing to comply with the law can therefore be very serious. Indeed, in the event of a claim being made for 3 times the deposit the view was that the court had no discretion and that if the landlord had failed to comply at the time the application was made by the tenant the court must award the compensation. This was clearly a problem for landlords who could be penalised due to an administrative error which, by the time they were made aware of it, was too late to rectify.
Two Court of Appeal cases relating to the registration of deposits have recently improved the position for landlords.
In Tiensia v Vision Enterprises Ltd (t/a Universal Estates) [2010] it was held that if a landlord provided to the tenant details of where the deposit was registered  before the court hearing date they would not be ordered to pay the monetary penalty. They would though still be liable for the tenant’s costs in issuing a claim.
In May of this year, the Court in Gladehurst Properties Ltd v Hashemi and another considered whether an application for the landlord to pay three times the amount of the deposit could be made once a tenancy had expired. The Court decided that it could not. A tenant’s application must be brought whilst the tenant is still occupying under the tenancy. This will, of course, include a period after the initial fixed term where the tenant remains in occupation
These decisions have been criticised as removing some of the “teeth” from the legislation.  Whilst that may be true, landlords should still ensure that if a deposit is taken, it is registered and the information provided to the tenant within 14 days. Failure to do so can still be expensive.
For further information on Landlord and Tenant Law or if you have any questions please contact Tom Williams at Lindleys Solicitors - 11 Alexandra Road,  Clevedon, North Somerset BS21 7QH  twilliams@lindleys.net 01275 877 277 or                                                                                                        Peter Angliss - 11 Great George Street, Bristol BS1 5RR pangliss@lindleys.net  0117 926 2408.