Almost all private landlords and letting agents (in England and Wales) who take a deposit under an assured shorthold tenancy agreement are required to protect those deposits in a government-approved deposit protection scheme. This list summarises the key facts about the changes in the law under the Localism Act
- Tenancies that were already in place on 6 April 2012 had 30 days in which to comply with the new rules.
- Landlords now have 30 days, instead of 14 days from receipt of the deposit to protect it in a scheme.
- The re-wording and extension of this timeline also closed the loophole with regards to deposit protection deadlines that was highlighted by cases such as Universal Estates v Tiensia in 2010. This case showed how judges were allowing landlords to protect the deposit after the deadline and even days before the court hearing, without sanction.
- If a deposit is not protected within 30 days, the tenant can take their landlord or letting agent to court for compensation. This is the case even if the deposit is protected a day or two late.
- Landlords must now provide 'Prescribed Information' regarding the deposit to a tenant within 30 days of receipt of the deposit.
- If a tenant makes an application to the county court once the tenancy has ended, the landlord will no longer be able to retrospectively protect the deposit in order to comply with the Act. If the tenancy has ended, the only option is for the landlord to repay the deposit to the tenant. This is the case even if the tenant owes you rent or the property is left in disrepair.
- The changes give the courts discretion to award not less than the amount of the deposit and not more than three times that amount depending on the individual case - plus the return of the deposit. For example, a repeat offender may find themselves with a larger fine compared to a landlord who has simply forgotten to protect as an administrative oversight.
Further clarity to Section 215 of the Housing Act highlights that a section 21 notice may not be given where a deposit has not been protected within the 30 day period.