Tenancy Deposit Schemes
From the 6thApril 2007 sections 212 -215 of the Housing Act 2004 (subject to amendments) requires all landlords of an assured shorthold tenancy (AST) in England and Wales to:
- Protect any tenancy deposit held by the landlord in an authorised tenancy deposit scheme,
- Comply with the ‘initial requirements’ of such a scheme and
- Provide the ‘prescribe information’ of the scheme to the tenant.
There are two sanctions where the landlord has not complied with these requirements:
- Prohibition of serving a section 21 notice
Section 213(3) requires a landlord to comply with the ‘initial requirements of the authorised scheme within 30 days of having received the deposit. The essential requirement is to protect the deposit in a scheme.
Section 213(6) requires a landlord to give ‘prescribed information’ about the deposit protection to the tenant (and any relevant person such as the person who paid the deposit on behalf of the tenant) in a prescribed form within 30 days of having received the deposit.
Although there is no prescribed form, The Housing (Tenancy Deposits) (Prescribed Information) Order SI 2007/797 sets out the following information to include:
- Details of the tenancy deposit scheme used
- Information on how the tenancy deposit scheme operates
- Procedures about the repayment of the deposit including dispute resolution
- Information relating to the tenancy and to any provision under which the deposit may be withheld
- Certification by the landlord, including having given the tenant an opportunity to sign the prescribed information document.
Section 214(1) of the Housing Act 2004 sets out that where a landlord fails to comply with either two requirements of protecting the deposit in a scheme and providing the ‘prescribed information’, or complies after the 30 days, then the tenant can claim an amount of 1 to 3 times the amount of the deposit in compensation from the county court.
If the landlord has protected the deposit and complied with all two requirements within the 30 days then there is no need for the landlord to re-comply every time a new tenancy arises with the same tenant, provided the deposit remains protected within the same scheme.
However if the landlord has failed in his two deposit requirements and then there is a replacement tenancy, then unless the landlord complies with the two requirements within the 30 days off the start of the new replacement tenancy, then another penalty will apply. This will continue for every replacement tenancy until the two requirements are met up to a maximum of three penalties.
Prohibition of Service of s.21 Notice
There are restrictions placed upon a landlord prohibiting him from relying upon a section 21 notice when he has failed to comply with either of the two requirements of the deposit protection scheme.
Section 215(1) of the Housing Act 2004 confirms that a section 21 notice may not be given at any time when:
- The deposit was not protected in an authorised scheme within 30 days of the start of the tenancy or
- Information about the deposit protection scheme (under section 213(6)) has not been complied with.
This is subject to section 215(2A) which sets out that a section 21 notice may be relied upon when:
- The deposit is returned to the tenant (less any agreed deductions), or
- A claim for the non-protection of the deposit has been dealt with by the county court under section 214(1) (or when the tenant has taken proceedings against the landlord for non-protection and those proceedings have been withdrawn or settled)
If during the period of a tenancy (the original or replacement) the deposit is protected and the prescribed information is given and the deposit remains protected with the same scheme, then section 213(3) and 213(6) will be considered to be complied with for all subsequent replacement tenancies.
However special provisions apply to Tenancies granted before 6th April 20112 where there is deemed compliance with section 213(3) and 213(6) if the deposit was protected and prescribed information was given by 6th May 2012. Original fixed term tenancies granted before 6th April 2007 where a statutory periodic tenancy arises after that date there is deemed compliance of section 213(3) and 213(6) if the deposit is protected and prescribed information is provided by the 23rd June 2015.