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How To Ensure The Lowest Penalty After Deposit Protected Late

how to low deposit compensationAbout THE TENANCY DEPOSIT LEGISLATION

To be in compliance with the Section 213 Housing Act 2004, any money taken from a tenant as a security deposit must be protected in a Government approved scheme within 30 days of receiving it. Just to clarify, it is NOT a legal requirement to take a deposit, so this legislation only applies to those landlords that have taken a deposit from the tenant.

After the tenants deposit is protected, the tenant must be given the tenant deposit “Prescribed Information”. The prescribed information must also be given to the tenant within 30 days of taking the deposit.

Note you must keep evidence of you giving (serving) the tenant the deposit certificate and the deposit prescribed information.

All tenant deposits taken even those taken before 2007 when the original deposit legislation was not introduced MUST be protected. Landlords had until the 23rd June 2015 to protect deposits.

Once the deposit is protected and the tenant deposit certificate and the deposit prescribed information is served within the time limit.

I DIDN’T PROTECT MY TENANT’S DEPOSIT in time?

If you are one of the many landlords or Letting Agents who have not protected your tenants deposit please read on.

Since the Housing Act 2004 was introduced, there has been further changes to Deposit Protection Legislation. Unfortunately ignorance of the tenant deposit legislation is no defence in law.

some of the most common scenarios;

1) My tenants have found out I did not protect their deposit and threatening legal action
Your tenant has discovered you did not comply with the deposit legislation and he potentially make a small claim against. The tenant can seek compensation for your failure to comply with the law. Either you pay compensation or face legal action.

This is unbelievably common.

2) I need to evict my tenant, but I can’t serve a Section 21 due to non compliance?
If the Deposit Protection Legislation has not been followed, meaning you failed to protect the deposit. You will be barred from serving a section 21 notice. Any section 21 notice where the deposit legislation was not protected than you will not be able to rely on a section 21 notice.

You may have an alternative by using the section 8 route (if you have the grounds). Note if you are going to use the section 8 route and your grounds are rent arrears it is important for you to deduct 3 times the value of the deposit out of the total rent arrears. This is important as the tenant may counterclaim for non-compliance of the deposit legislation.

3) The Court threw out my Section 21 possession claim because I had not protected the tenants deposit
Most tenants will take legal advice when they are served with a Section 21. One of the first questions they maybe be asked is “Did your landlord protect your deposit?” Followed by “Did your landlord send you the legally required information about your deposit protection within 30 days?”

If your tenant cannot answer YES to both questions they will be told to contest the Section 21 in court. If you failed to comply with the deposit legislation than your possession claim is very likely to be dismissed

4) I did not know about the tenant deposit legislation what can I do?
This is a common case where the landlord has just one property. You may have heard through a friend that the tenant can gain compensation.

5) I forgot!
You forgot to protect the deposit and/or serve the prescribed information (not sure how many people will believe this one!). To forget not protecting the deposit is not a defence.

Any of the above sound depressingly familiar? If your case is not one of the above (or similar), please leave a comment with the details…

I DIDN’T COMPLY WITH THE TENANT DEPOSIT LEGISLATION– WHAT CAN I DO?

Now, let’s get to the crux of the matter.

As it stands, these are your options:

  • Recommended solution:Protect it now and serve the prescribed information hoping that if an issue arises and it goes to court the Judge will take the view “better late than never”
  • Pay the deposit back to the tenant and hope that he doesn’t find out that he can get compensation, although it might be difficult to explain *why* you’re giving it back.
  • If you’re trying to get rid of a rogue tenant, use a Section 8, with grounds for eviction.
  • Do nothing, but sit tight and pray that your tenants don’t realise protecting the deposit and serving the Prescribed Information is a legal requirement and/or they don’t care enough to seek compensation because you’ve been an amazing landlord.

IF YOUR TENANT HASN’T MENTIONED ANYTHING…

There’s a chance your tenant isn’t aware of the tenancy deposit legislation or the ramifications of failing to comply. It’s also not unusual for tenants to be aware, but waive their right to prosecute because their landlord has been reasonable throughout the tenancy.

The point here is that you don’t want to give your tenant a reason to consider the legislation or exercise their right to claim compensation.

Contact Landlord Advice UK the experts in this area of law. Click here to go on their website or ring them on 020 3903 2000

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