These articles gives a general overview only and the legal position at the time of writing them. It cannot be relied upon in any particular case. Specific legal advice must always be considered to include consideration as to whether the legal position contained in this article has changed since going to print.

Residential Tenancy Deposits - Getting it Right

As can be seen the recent ruling by the Court of Appeal in Tiensa v Vision Enterprise Limited gives residential landlords who have taken a deposit from an assured shorthold tenant but failed to pay it into an appropriate Tenancy Deposit Scheme (“TDS”) or comply with the other obligations set out in the Housing Act 2004 (“HA”) a “Get out of Jail Free” card. However, this is not necessarily the case.

In Tiensa, the landlord issued possession proceedings and sought arrears of rent following service of a Section 8 Notice. The tenant issued a counterclaim seeking damages of 3 x the deposit pursuant to Section 214 of the HA on the basis the deposit was unprotected. The landlord then paid the deposit into a TDS before the hearing of the tenant’s claim.

The Court of Appeal upheld the decision in Draycott v Hannells Lettings Limited in holding that the penalties set out at Section 214were intended to punish a failure to protect the deposit at all rather than a failure to do so within 14 days of receiving and it went on to hold that the appropriate date when considering whether or not a landlord had complied was the date of the hearing.

At first sight, the practical effect of this decision appears to be that a landlord who has not paid a deposit into a TDS or provided the required information can correct the position at any time up to the hearing of a possession claim or a tenant’s claim for damages pursuant to the Act.

However, the decision in Tiensa does not assist where the Landlord seeks possession using the accelerated procedure following service of a Section 21 Notice terminating the tenancy at the end of two months.

Section 215 of the Act states that no Section 21 Notice may be given at a time when:-

Section 213(6)(a) sets out the requirement to give certain prescribed information regarding the deposit and the scheme it is secured in to the tenant. This is in addition to the requirement to pay the deposit into an authorised scheme but just as important for landlords.

Where a landlord wants to bring an assured shorthold tenancy to an end, the accelerated procedure set out in Part 55 of the CPR is the most straightforward and cost effective way of doing so if possession is the only order required (i.e there are no arrears). Unlike Section 8 proceedings (as in Tiensa) no grounds need to be made out and in most cases the matter is dealt with on paper without the need for a hearing.

The three Section 215 requirements are mirrored in the standard particulars of claim. The landlord must confirm that at the date off service of the Section 21 Notice, all three had been complied with. As a result, unless the landlord has complied with the Section 215 requirements, he cannot use the accelerated possession procedure

However, it should be noted that Section 215 has no bearing on “standard” possession proceedings brought following service of a Section 8 Notice, or where the landlord is defending a claim by a tenant under Section 214 of the Act (as was the case in Tiensa) where the landlord can still regularise the position by late compliance with Section 213.

As set out above, this option and the relief from Tiensa is not available where the landlord wants to rely on service of a Section 21 Notice as the Notice itself will be invalid. Steps will need to be taken by the landlord to regularise the position before he can rely on a Section 21 Notice.

Finally, in relation to the requirement to provide prescribed information landlords should make very careful enquiries with their scheme provider. Failing to provide all of the required information will mean that no valid Section 21 Notice can be served and thus the accelerated procedure cannot be used. The scheme may not necessarily provide all of the prescribed information and landlords should not assume their scheme provider will provide the tenant with all of the information required. The onus is on the landlord and care should be taken to avoid the pitfalls.

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<p><strong><a href="http://www.lemon-co.co.uk/article_residential-tenancy-deposits.php">Residential Tenancy Deposits - Getting it Right</a></strong><br /> As can be seen the recent ruling by the Court of Appeal in Tiensa v Vision Enterprise Limited gives residential landlords who have taken a deposit from an assured shorthold tenant but failed to pay it into an appropriate Tenancy Deposit Scheme (“TDS”) or comply with the other obligations set out in the Housing Act 2004 (“HA”) a “Get out of Jail Free” card. However, this is not necessarily the case....</p>

 

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