Tenant Deposits – don’t get caught out!
This all changed following the introduction of the Localism Act 2011 which came in to force on 6th April 2012. It is now the case that if a tenancy deposit has been taken from a tenant, it must be protected within a recognised scheme within 30 days and the tenant must also be provided with Prescribed Information (relating to where the deposit is held and other specific information). If these requirements are not complied with within the 30 day limit, the tenant will immediately be entitled to issue a claim against the landlord for the return of the deposit together with additional damages of up to three times the deposit value. This claim can even be made after the tenancy has ended. As such, if a landlord has failed to protect a deposit within 30 days, we would advise they pay it back to the tenant, sooner rather than later to avoid a claim.
In addition, if a landlord needs to seek possession of their property they would be greatly restricted if a deposit has not been protected. A landlord is unable to serve a valid s21 notice seeking possession until the deposit is returned. You can still technically issue possession proceedings based on a section 8 notice, but be prepared for a Counterclaim by the tenant for non-protection of the deposit.
For support with tenancy deposits, serving notices to tenants, collecting rent arrears and preparing tenancy agreements please call our Landlord & Tenant expert now.