Regular blog readers may recall that I have written about some of the more curious senior court decision concerning the provisions of the Housing Act 2004 in relation to tenancy deposit schemes.
These were schemes set up to require that landlords paid the tenancy deposit into a government authorized scheme and confirm details of these arrangements with the tenant to prevent exploitation of tenants at the end of a tenancy. Failure to do so meant that a landlord could not rely on section 21 as a ground for possession and faced returning the deposit and a fine to the value of three times the value of the deposit for non-compliance.
The courts took the view that the punishment did not fit the crime, particularly in relation to the fine payable and the decisions in Tiensia v Vision Enterprises Ltd (trading as Universal Estates); Honeysuckle Properties v Fletcher and others; and Gladehurst Properties Ltd v Hashemi more or less stripped the legislation of its effectiveness.
The government went back to the drawing board and under the Localism Act 2011 has tried to plug the holes created by the judiciary with some amendments to the original legislation:
- Penalties for non-compliance apply to tenancies that have come to an end after 6 April 2012.
- Penalties for non-compliance apply where the landlord or agent has protected the deposit after the deadline.
- The deadline for the protection of deposits has been extended from 14 days to 30 days.
- An element of judicial discretion has been introduced so that the financial penalty for non-compliance is now between one and three times the deposit.
It remains to be seen whether the Tiensia decision will stand and that a landlord can still fully protect themselves by registering a deposit before the final hearing for the matter. However, the clear message for landlords must be to ensure that the deposit is protected and the tenant is properly informed of its whereabouts or face the consequences!
The Department for Communities and Local Government FAQ is published here.
If you would like more information or advice relating to a specific matter, please do not hesitate to contact Chris Alexander on 01727 798042 or by email email@example.com or any member of the Property Litigation Team.
© SA LAW 2012
Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them. You are recommended to obtain specific advice in respect of individual case.
Posted by VictoriaThomson at 9:57 am on April 10, 2012.