Q. My tenant asked me to offset his rent arrears against the deposit (which I had not protected) and is now threatening to sue me for three times the deposit money if I don't allow him to end the tenancy early. How can he do this as the deposit no longer exists?
A. I am afraid the tenancy deposit rules are very strict. If you fail to protect the deposit, and if you fail to serve the prescribed information within 30 days of receipt of the deposit money, then the tenant can bring a county court claim for the penalty (under section 214 of the Housing Act 2004).
The action which triggers this right is the failure to protect within the 30 days. Once that has happened, the tenant will be entitled to bring the claim. The fact that the deposit was later offset against the rent may eliminate the deposit itself but it does not remove the right the tenant has to bring the claim for the penalty.