Landlords: Why you must protect a tenant’s deposit

Landlords: Why you must protect a tenant’s deposit

As a landlord, you have a legal obligation to protect a tenant’s deposit. (Please see our section on those tenancies that do not require the deposit to be protected here)

Your obligations are to:

  

·        Protect the tenant’s deposit in one of the qualifying schemes.

·        Protect the deposit within 30 days of receiving it.

·        Provide the prescribed information regarding the scheme within 30 days of receiving it.

Failure to comply with any of these three responsibilities can result in 2 sanctions:

1)    You will be unable to use a Section 21 notice: under Section 21 of Housing Act 1988, a landlord can serve two months' written notice on a tenant in order to terminate a tenancy at the end of a fixed term, or after a fixed term has expired. However, where a landlord fails to comply with Tenancy Deposit Protection, no Section 21 notice may be given in relation to the tenancy until the legislation is complied with.

2)    Tenants can seek legal recourse through the County Court under the Housing Act 2004. If the tenant can prove that the landlord has failed to comply with these requirements, the court can order the landlord to pay the full deposit, as well as compensation of up to three times the value of the deposit to the tenant. It is also worth noting, that currently, even if your tenancy has ended, assuming it did so after the 6^th April 2013, you may still have a legal case for compensation.