Q. I have not protected my deposit and my tenant is threatening to take me to court for the penalty payment. What can I do?
A. Protect the tenancy deposit immediately and serve the prescribed information notice.
Note that the rules are changing on 6 April this year under amendments brought in by the Localism Act 2011. After that you will have 30 days to protect but will not be able to protect out of time - or rather you will be able to protect, but by dong this you will not acquire a defence to a tenants claim for the penalty payment.
The penalty payment to be awarded, after 6 April will change to being between 1 and 3 months deposit, the precise sum to be awarded will be at the discretion of the Judge.