Q. We rented a property to a tenant last May on a six month AST who paid a deposit of £500 but we forgot to protect it. The tenant left at the end of the term leaving the place in a mess and we therefore deducted his deposit in full. We now have a letter from a tenancy claim company saying we have to pay him £1,500. What's going on?

A. I am afraid you are in breach of the tenancy deposit regulations. These say that landlords (and their letting agents) MUST protect the tenancy deposit with a government authorized scheme within 30 days and serve prescribed information on the tenant.

If they don't do this, the tenant can sue for the return of the deposit and a penalty of between one and three times the deposit sum, the exact amount to be with the discretion of the Judge.

The bad news for you is that there is no defence to a claim for the penalty although you may be able to counterclaim for the cost of putting right the damage in the property and offset this if an award is granted to you. However, you will need to prove your claim to the Judge and so will need evidence of damage and receipts to prove the amount you are claiming.