As reported in a number of places now, for example on Nearly Legal – we have a new case on tenancy deposits.
A new case which moreover, rams home the ABSOLUTE CRITICAL IMPORTANCE of the prescribed information when protecting deposits.
The Court of Appeal speak
The case is the Court of Appeal decision in Ayannuga v Swindells on 6 November 2012. This case involved a landlord, who had protected the deposit but had not complied with the prescribed information.
The tenant had fallen into arrears of rent and the landlord sued for possession. However the tenant defended and counterclaimed, claiming the penalty under the tenancy deposit regulations as the landlord had not provided all the prescribed information.
The landlord, in response to this, admitted that he had not complied fully with the regulations (which you can see here), but said that this wasn’t really necessary as all the information was available on the Internet and the tenant could easily find it out for himself.
The important thing (he said) was the protection of the deposit – which he had done.
The Judge at the first hearing agreed with him, but the Court of Appeal didn’t. They said that the prescribed information was of real importance, as it told tenants how they could seek to recover their money and how they could dispute deductions, without having to go to court.
The landlord was therefore ordered to pay the full penalty of three times the deposit amount to the tenant AND pay back the deposit. And no doubt pay costs.
Why the Court of Appeal were right
I suspect that many landlords will agree with the landlord in this case and consider the prescribed information regulations to be a waste of time. Another bit of useless procedural nonsense which can be ignored.
However the prescribed information IS really important. Most tenants don’t have a clue about tenancy deposits and how they work. The prescribed information tells them
- which scheme the landlord has used,
- how they can be contacted
- what their procedures are, and
- where in the tenancy agreement they can find out what the landlord is entitled to make a deduction for.
Which are all things tenants need to know. As most tenants don’t even know the regulations exist, it is a bit unreasonable to expect them to go scouring the Internet to find out what they say (leaving aside the fact that not all tenants will have access to the Internet – not easily anyway).
Plus of course, its the law.
What this means for landlords
When you take a deposit you MUST with 30 days
- Protect the deposit, and
- Serve any leaflet provided by your scheme, and
- Serve the rest of the prescribed information not covered in the leaflet (in particular tell them the clause in their tenancy agreement that deals with deductions from the deposit)
The schemes vary in helpfulness here, perhaps the most helpful being the RLA DepositGuard scheme, along with the TDS schemes, where a prescribed information form is provided to you.
We have a form on Landlord law which will be suitable for landlords using DPS and My Deposits, and I understand that one can also be purchased from Lawpack.
If you don’t serve the prescribed information:
- Your tenant can claim the penalty of three times the deposit sum AND the return of the deposit at any time during the next six years and you will have no defence
- Your tenant will have a defence to any claim you may make for possession based on rent arrears – as they can ask the court to offset their penalty award against the rent arrears
I would advise all landlords, in the light of this case, to check all their tenancies and make sure that they are fully compliant.