Although I wrote about tenancy deposits last week, I thought it might be helpful just to do a brief summary of the current situation from the tenants point of view.
Tenancy deposits law
Under the Housing Act 2004, all deposits must by law be protected with a government authorised tenancy deposit scheme within 14 days of payment of the deposit. The landlord must also serve the tenant with a notice giving prescribed information.
This has not changed. However one of the penalties put into the legislation to make landlords comply with this, has been found to be unenforceable in recent cases.
The section 21 penalty
This is the penalty which says that landlords cannot use section 21 to evict tenants if the deposit is unprotected at the time the notice is served. When bringing a claim for possession using the accelerated procedure the landlord now has to certify that he has complied with the regulations, and therefore will be guilty of perjury if he lies.
This penalty is still fully enforceable and means that tenants whose landlord has failed to protect their deposit cannot be evicted under section21.
The problem
However the problem is that many tenants do not want to stay at the property. They want their deposit back when leaving.
If the landlord has not protected the deposit however, and makes what they consider to be unjustified deductions, they will not, if the deposit has not been protected, have access to the free adjudication scheme which is provided by the schemes as part of their service.
They will have to go to court, which for many ordinary people is intimidating and scary. One of the main reasons for the tenancy deposit scheme being put into place in the first place was to make it unnecessary for them to have to do this.
The three times the deposit sum penalty
This is one reason why the regulations provided for the tenant to be able to go to court to claim a penalty of three times the deposit sum if the landlord failed to protect within the 14 days.
However there are big problems with this. Because of the confusing way the statute was worded
- The Draycott and then the Tiensia cases decided that the landlord could protect himself and avoid the award by protecting the deposit at any time up to the day before the hearing.
- It was thought that if the deposit remained unprotected after the tenancy had ended the landlord would no longer be able to do this. However it seems from the Soens-Hughes v. Lewis case I reported on last week that Judges are taking the opposite view, and are saying that if the deposit has been returned then the award is no longer payable.
- Therefore it seems that the only circumstances under which the courts will now make the award is where the deposit is still unprotected at the date of the court hearing.
Tenancy deposits – the future
The Soens-Hughes v. Lewis case is only a County Court decision and is therefore not binding on other Judges. There are other cases in the pipeline waiting for appeal and the appeals may be decided differently. But we don’t know until the decisions are published.
However whatever these cases decide, it looks as if the law is going to be changed anyway in the Localism Bill. It is impossible to know for sure though, what the bill will say until it is made law.
Conclusion
So what should tenants do? I would suggest that if you want your deposit back and your landlord has not protected it, you should issue County Court proceedings for its return. Include a claim for the penalty of three times the deposit sum.
If your landlord returns the whole of the deposit to you before the hearing date, then it looks as if you will not be awarded the penalty. But at least you will have got your deposit back.
If however your landlord has not refunded the deposit, the Court will be able to make the award.
But this may change so watch this space.
Tessa – having recently read up on the current situation with tenancy deposits, I completely agree with your summary. A great article!
a great article and some good information.
what would happen if the deposit was not protected, but some minor deductions were made before returning the balance of the deposit to the tenants – i.e. would a court order a landlord to pay 3 times the full deposit or three times the deducted amount?
if part of the deposit has already been returned then a landlord cannot protect the desposit before a court hearing and therefore is in a much worse position than if he had witheld the full deposit.
how would a judge look upon this or what are the legal ramifications?
in summary, would a court order a landlord to pay 3 times the full deposit or three times the deducted amount?
I am very much afraid that the Court would have no alternative but to make the award. As you say, once the deposit has been returned it is too late to protect it.
It would be an award of three times the deposit amount as that is what the reglations say. Sorry!