Under Section 213 (3) of the Housing Act 2004 any landlord who receives a deposit in relation to an Assured Shorthold Tenancy must protect that deposit by placing it in the Regulated Tenancy Deposit Scheme.
This requirement has been in place since 6 April 2007. The Landlord must also give the tenant a copy of prescribed information within 14 days of receiving the deposit. This information includes details of which Scheme the money has been put into, procedures for repayment of the deposit at the end of the tenancy, the amount of the deposit and the circumstances in which this may be retained by the Landlord.
If the Landlord does not put the funds into a Deposit Scheme then the Court has the ability to put in place a number of sanctions. The Landlord may be ordered by the Court to repay the deposit to the tenant and may be fined up to 3 times the amount of the deposit. Failure to place the deposit in a Scheme can also cause issues if the Landlord needs to secure possession of the property.
However, in the case of Tiensia -v- Vision Enterprises Limited [2010] EWCA Civ 1224 the Court of Appeal allowed a Landlord who, was late in complying with his obligations to protect the deposit and provide information, to nevertheless raise his late compliance as a complete Defence to a claim by the tenant under Section 214 of the Housing Act 2004.
Although the Landlord is required to protect the deposit within 14 days of receipt, it seems that the Landlord now has until the date of a hearing of a Tenant’s Section 214 Application to comply with the obligations under Section 213. The Court stated that although the Act imposed requirement for protection within 14 days, the focus of the sanctions for non-compliance was not on whether it had been complied with within the time limit but on whether there had been any compliance at all.
We still recommend that Residential Landlords who are renting out property on Assured Shorthold Tenancy ensure that the deposit is correctly placed in a Deposit Scheme within a 14 day period. However, if for any reason this has not happened then compliance with the legislation as soon as is practicable would still afford a Defence to any claim that a Tenant may wish to bring.
For more information or advice on the Tenancy Deposit Scheme, please contact
Jane Senior.
