The Consequences of Landlords Failing to Register Tenancy Deposits and Provide Prescribed Information
Tenancy Deposits and Prescribed Information
It is mandatory for a landlord to join an authorised tenancy deposit scheme (TDS) where a tenant pays a deposit to the landlord on the commencement of an assured shorthold tenancy. On receipt of the deposit, the landlord must comply with the initial requirements of the TDS within 30 days beginning with the date on which the deposit was received.
A landlord must also, within that 30 day period, give to the tenant information about the scheme. This is known as ‘prescribed information’.
The Consequences of Landlords Failing to Adhere to the Deposit Rules – Court Action
Where a deposit has been paid in connection with an assured shorthold tenancy, the tenant may make an application to the court on either of the following grounds:
That the prescribed information has not been provided within the 30 day period; or
- That the initial requirements of the authorised TDS have not been complied with within the 30 day period;
- That the prescribed information has not been provided within the 30 day period; or
- That the tenant has been notified by the landlord that the particular authorised TDS applies but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.
If the tenancy has not yet ended and the court is satisfied that there has been non-compliance, the court must make the following orders:
- That the person who holds the deposit pay it to the applicant (the tenant or relevant person who paid the deposit on behalf of the tenant) within 14 days or pay it into a designated account held by the scheme administrator under an authorised custodial TDS within 14 days; and
- That the landlord pay to the applicant a sum of money equal to between one and three times the amount of the deposit within 14 days (does not apply to a deposit paid before 6 April 2007 and where the tenancy became periodic before this date).
If the tenancy has ended and the court is satisfied that there has been non-compliance, the court may order the person holding the deposit to repay all of part of it to the applicant within 14 days and must order the landlord to pay the applicant a sum of money equal to between one and three times the amount of the deposit within 14 days.
Therefore, regardless of whether the tenancy has ended or not, the applicant is entitled to between one and three times the amount of the deposit.
The Consequences of Landlords Failing to Adhere to the Deposit Rules – No Section 21 Notice
If a tenancy deposit has been paid in connection with an assured shorthold tenancy, the landlord cannot serve a section 21 notice to recover possession of the property if at the time the section 21 notice is served the deposit is not being held in an authorised TDS.
However, the landlord can serve a section 21 notice if the deposit is returned to the tenant or an application has been made and determined by the court, withdrawn or settled by the agreement of the parties. This can cause significant delays in terms of obtaining possession.
Further, the landlord cannot serve a section 21 notice until such time as the prescribed information has been provided. Therefore, a section 21 notice can be served once the prescribed information has been provided.
Conclusion
Landlords must join an authorised TDS as soon as a deposit is paid in connection with an assured shorthold tenancy, comply with the requirements of the TDS within 30 days and provide the prescribed information within 30 days.
Blackstone Solicitors have specialists to advise you in order to avoid the above consequences. We recently successfully settled a case on behalf of a landlord where the landlord failed to register the tenancy deposit prior to the date of the court hearing. Please contact us on 0161 929 0121 for advice and assistance in relation to landlord and tenant issues.
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