Picture this: a difficult tenant decides that they don’t want to leave the property at the end of its lease and the landlord can’t wait to see the back of them. The landlord wants to recover possession and use the tenant’s deposit to pay for any damage that the troublesome tenant has caused. It sounds relatively straightforward but there’s a catch. Landlords who take security deposits from tenants occupying residential premises under an assured shorthold tenancy must do two things within thirty days of receiving it: protect it in one of the three approved tenancy deposit protection schemes; and provide the tenant with certain information about how their deposit is held.
Woe betides any landlord who fails to do either of these things as he will not be able to serve notice to recover possession from the tenant at the end of the tenancy and, to add insult to injury, the landlord will have to pay a penalty of between one and three times the amount of the tenant’s deposit, the exact amount to be determined by the court.
In a recent decision, the Court of Appeal explained that providing the tenant with the information was equally as important as the obligation to protect the deposit with an approved scheme, as it enabled tenants to understand how that particular scheme worked and how to reclaim the deposit at the end of the tenancy. The fact that a tenant would be able to obtain the information directly from the scheme was irrelevant. The Court of Appeal in the case ordered the return of the tenant’s deposit (£950) and, perhaps surprisingly, awarded payment of the maximum penalty of three times the deposit (another £2850).
Most landlords are anxious to comply with the first requirement but sometimes fail to provide the required information. This case is a reminder to landlords that a failure to do so will be an expensive mistake and well informed tenants are likely to lie in wait for landlords to slip up.
For further information on the rules for tenancy deposit scheme and a full list of the information to be provided to tenant, please download our client note Tenancy Deposit Schemes.