You haven’t got to be particularly well-connected to realise that not all landlords are supporters of tenancy deposit protection (TDP). For many it remains as contentious today as when introduced in April 2007 – and recent developments are unlikely to help change those opinions.
As committed followers of events in the private-rented sector will be aware there have been a number of fairly high profile legal cases in recent months concerning TDP arrangements.
So, shortly before the country fell silent for the annual Armistices Day memorial, the Court of Appeal in London made sure it was heard in relation to the latest of these, the conjoined appeal of Universal Estates v Tiensia and Honeysuckle Properties v Fletcher .
Both cases involved the protection of deposit monies outside of the 14 days provided in the TDP scheme’s rules – but subsequently before the court hearing.
The court ruled, that in line with the earlier case of Draycott v Hannells Lettings, penalties prescribed in the Housing Act in relation to a failure to protect deposits cannot be invoked following late protection according to an individual scheme’s rules.
The result of this judgement is confirmation that landlords should not be ordered to pay three times the deposit amount as penalty for late protection – provided that protection takes place prior to the court hearing. This will come as welcome news to those landlords who have in error failed to protect their deposits immediately.
No need to protect deposits anymore then?
Wrong! The NLA cautions landlords that this decision is not a reason not to protect their tenants’ deposits – or to wait until they are threatened with court proceedings before doing so. TDP is still a legal requirement in relation to most ASTs and failure to comply with the scheme rules of their chosen protection company – which may still require protection within 14 days – could result in administrative penalties courtesy of that scheme.
Further more, Justice Thorpe advised tenants who may need to rely on the Court to enforce the legislation, that landlords should be expected to pay their legal costs.
Landlords should also remember that this case only looked at one aspect of the legislation and that there are numerous parts of the TDP rules which were not touched by this decision – including what happens if proceedings are brought regarding a tenancy which has already ended.
It is possible that the Government will amend the legislation at the root of these cases to clarify exactly what requirements are ‘in the spirit of the law’ but given the current agenda in Parliament this is perhaps unlikely to happen soon.
In the mean time landlords are advised to continue to register any deposits as soon as practically possible with one of the three Government backed schemes and to check the terms and conditions of their chosen scheme for any requirements which could lead to dispute in the future.