There are probably a lot of angry landlords out there.
Landlords who were sued by their tenants for the deposit of three times the deposit sum because they failed to protect, and were ordered to pay up.
Why are they angry?
Because if they were to be sued now, they could protect late and avoid the penalty. Or they may be able to get away with never having to protect at all!
Two Court of Appeal decisions have effectively changed the law and the upshot is that the penalty is now more or less a dead letter. The two decisions conerned are:
The Tiensia case
I discussed this when the decision was published last year. Here the Court of Appeal said that landlords could avoid the penalty if the landlord protected at any time up to the day before the court hearing. In this case the deposit was protected late but before the tenancy had ended.
Gladehurst Properties Ltd v Hashemi
This is the new case. The facts are reported here on Nearly Legal and the court report is here on BAILII. The effect of this decision is that tenants are not able to make any claim for the penalty payment once the tenancy is over.
As pointed out on Nearly Legal, this makes a complete nonsense of the whole thing, as most tenants will only find out about the failure to protect the deposit when the landlord fails to return it to them after they have moved out.
So before the tenancy the landlord can get out of it by protecting late. After the tenancy has ended the claim can’t be made at all. Fat lot of good really having the penalty!
Why should a landlord bother to protect at all?
- He might want to serve a section 21 notice, and that notice will be invalid if the deposit has not been protected before it is served
- Its the law. Toothless, but still the law
- Things might be changed by the Localism Bill
The Localism Bill is to have its third reading shortly so we may learn more then.
I have given some guidance to tenants on making a claim here but I doubt whether anyone will want to bother now!