Not such a Good Friday for the Private Rented Sector…?

Section 184 of the Localism Act 2011 came into force from last Friday, 6 April 2012 -
whereby you must now protect all of your tenants’ deposits by 5th May 2012, whether they are existing or new tenants within 60 days of a tenancy starting.

The changes apply in England and Wales, giving landlords 30 days to protect the deposit (on any Assured Shorthold Tenancy agreement) after receiving it – up from the previous 14 days. Landlords must also give their tenant the required Prescribed Information and Deposit Protection Certificate as proof that the deposit is protected within this 30 day period.

2011 c. 20 > PART 7 > CHAPTER 6 > Tenants’ deposits > Tenancy deposit schemes > Section 184:

(1)The Housing Act 2004 is amended as follows.
(2)In section 213 (requirements relating to tenancy deposits) —

(a)in subsection (3) (landlord’s requirement to comply with initial requirements within 14 days of receipt of deposit) for “14” substitute “30”, and

(b)in subsection (6)(b) (landlord’s requirement to give tenant information within 14 days of receipt of deposit) for “14” substitute “30”.
(3)Section 214 (proceedings relating to tenancy deposits) is amended as follows.

(4)In subsection (1) (grounds for an application to a county court) for paragraph (a) substitute —

“(a)that section 213(3) or (6) has not been complied with in relation to the deposit, or”.
(5)After subsection (1) insert —

“(1A)Subsection (1) also applies in a case where the tenancy has ended, and in such a case the reference in subsection (1) to the tenant is to a person who was a tenant under the tenancy.”
(6)In subsection (2) (conditions for a remedy) —

(a)in the opening words for “if on such an application” substitute “in the case of an application under subsection (1) if the tenancy has not ended and”, and

(b)for paragraph (a) substitute—
“(a)is satisfied that section 213(3) or (6) has not been complied with in relation to the deposit, or”.
(7)After subsection (2) insert—

“(2A)Subsections (3A) and (4) apply in the case of an application under subsection (1) if the tenancy has ended (whether before or after the making of the application) and the court—

(a)is satisfied that section 213(3) or (6) has not been complied with in relation to the deposit, or

(b)is not satisfied that the deposit is being held in accordance with an authorised scheme,
as the case may be.”
(8)After subsection (3) insert—

“(3A)The court may order the person who appears to the court to be holding the deposit to repay all or part of it to the applicant within the period of 14 days beginning with the date of the making of the order.”
(9)In subsection (4) (amount of penalty payment)—

(a)omit “also”, and

(b)for “equal to” substitute “not less than the amount of the deposit and not more than”.
(10)Section 215 (sanctions for non-compliance) is amended as follows.
(11)In subsection (1) (prevention of service of notice under section 21 of the Housing Act 1988)—

(a)at the beginning insert “Subject to subsection (2A),”, and

(b)for paragraph (b) substitute—
“(b)section 213(3) has not been complied with in relation to the deposit.”
(12)In subsection (2) (prevention of service of notice under section 21 of the Housing Act 1988) at the beginning insert “Subject to subsection (2A),”.
(13)After subsection (2) insert—
“(2A)Subsections (1) and (2) do not apply in a case where—

(a)the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant, or

(b)an application to a county court has been made under section 214(1) and has been determined by the court, withdrawn or settled by agreement between the parties.”
(14)In Schedule 10 (provisions relating to tenancy deposit schemes) in paragraph 5A(9)(b) (modification of section 213(3)) for “14” substitute “30”.

The changes were made to the Localism Act to close a legal loophole, which saw some landlords successfully appeal against penalties for failing to protect a deposit.

If a landlord fails to protect their tenants deposit, they could be taken to court and fined between one and three times the deposit amount (at the courts discretion) and will also be unable to apply for a possession order, with a Section 21 notice, until the matter is fully resolved.
Meaning that any deposit taken since April 2007 must be protected under the Housing Act 2004, and any deposit taken since then must be protected under the same legislation but also must comply with the changes made in the Localism Act 2012.
Any deposit not protected by 5th May (30 days grace from 6th April changes) will be held outside of the law.

For tenants this means they can make a claim against a landlord who did not safeguard a deposit in an approved scheme for up to six years after they have moved on – instead of 30 days, under the previous rules.

Landlords or agents must use one of the three government approved tenancy deposit schemes to protect tenants’ deposits where these conditions apply. If any other scheme is used, deposits will not be legally protected.
The three approved schemes are:

• Deposit Protection Service (DPS)
• MyDeposits
• Tenancy Deposit Scheme (TDS)

The information that you must provide your tenant, within 30 days, is:

• contact details for yourself or your agent
• which of the three schemes you are using to protect the deposit
• information about the purpose of a tenancy deposit
• how the tenant can apply to get the deposit back at the end of the tenancy
• what happens if there is a dispute about the deposit.

At Landlord Referencing we are all wondering HOW this can possibly be administered properly and the judicial process be maintained fairly, when (in our experience) more than 50% of all tenancies end in some form of dispute…?

• Will this provide better protection, for both landlord & tenant, if there is a dispute?

• Is this just another poorly constructed law that’s in favour of the tenant and will further exploit good landlords in the future?

• When is the government going to stop interfering with contracts between two adult parties, in the private rented sector?

Whatever your view is we would love to hear from YOU.