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Non-compliance with Tenancy Deposit Scheme can prevent Landlords from evicting

House shaped money box
Money being poured into a house

Landlords cannot terminate a tenancy under s21 if the deposit is not protected

The Tenancy Deposit Scheme has been in force since 6th April 2007 having been introduced by the Housing Act 2004. It was designed to prevent spurious landlords diverting the money without the tenant’s consent and to provide protection against insolvency. It requires landlords of residential premises let on assured shorthold tenancies to protect deposits and to provide tenants with prescribed information.  Failure to do so carried potential penalties of three times the deposit.  The Court of Appeal determined that the penalties applied if there was a complete failure to comply up to and including the date of the hearing.  This gave the errant landlord some comfort as even if the initial requirements had not been met, this could be rectified later and penalties avoided.

Changes to the Original Scheme

However, little publicised amendments to the legislation were made with effect from 6th April 2012. These provisions apply to tenancies created after 6th April 2007.  A landlord holding an unprotected deposit as at 6th April had 30 days grace in which to pay the deposit into a scheme under transitional provisions. A number of landlords have been caught out by this change in the law or were simply not aware of the need to protect deposits in this way.

A landlord in respect of a tenancy created on or after 6th April 2012 now has the longer period of 30 days (in place of 14) from the date the deposit is received in which to comply with the requirements as to protection and information and that deadline now appears to be absolute, certainly as far as protection is concerned.  Further the tenant’s right to claim for penalties survives the end of the tenancy.  The level of the penalties is now up to three times the deposit.

Following the commencement of the Deregulation Bill 2015, where a deposit was received before 6 April 2007 in connection with a fixed term assured shorthold tenancy and a periodic tenancy has arisen since that date, the landlord has until 23 June 2015 to protect the deposit and provide to the Tenant the prescribed information. If this is done, the deposit will be treated as if it has always been protected.

Implications

No notice to terminate the tenancy can be given under Section 21 of the Housing Act if the initial requirement as to protection of deposit has not been met.  It is no longer possible  to rectify this after the deadline for doing so, which leaves the errant landlord with no option but to return the deposit to the tenant before taking steps to recover possession under Section 21, unless of course the tenant brings proceedings seeking a penalty. Whilst under section 21 the tenant is given 2 month’s notice ending no earlier than 6 months after the tenancy began, the procedure to evict a tenant in breach of such a notice is relatively straightforward.

No section 21 notice can be sent if the prescribed information about the Deposit has not been given to the tenant, but this information can if necessary be given late. The Deposit however cannot be paid late into a scheme in order to enable service of a section 21 notice. It has to be returned. This leaves the landlord without a reserve to pay for any damage to the property. Some tenants stop paying the rent on receipt of the notice, leaving the landlord having to sue for the arrears if the tenant can be found and has the wherewithal to pay.

A section 8 notice can be served regardless of the position regarding the deposit, although the tenant may still claim for the penalties in respect of the breach. The ability to serve a section 8 notice depends upon establishing a ground for possession. If the tenancy term is long and for example the tenant has ceased paying the rent, this can be a useful way to end the tenancy early and recover the property. However if there are no grounds for possession or if the term is about to end, section 21 provides the easiest, quickest and cheapest solution.

A residential occupier refusing to leave cannot be evicted without a Court order.

By Sarah Payne, Litigation Solicitor at Cambridge solicitors Barr Ellison.

Disclaimer: While we do all that is possible in terms of ensuring its accuracy, this blog contains general information only. Nothing in these pages constitutes legal advice. You need to consult a suitably qualified lawyer from the firm on any specific legal problem or matter.

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