Changes to come into force on 6 April 2012 governing tenancy deposit schemes are being introduced in an attempt to address earlier criticisms of the scheme, highlighted by the law courts decisions in Tiensia v Vision Enterprises Ltd 2010 and Gladehurst Properties Ltd –v- Farid Hashemi 2011. Residential landlords should be aware of these changes as the penalties of defaulting landlords are now more stringent says the law firm Adams & Remers.

Alix Lee, a solicitor at Adams & Remers said: “Section 184 of The Localism Act 2011, introduces a number of legislative amendments to the deposit scheme, the purpose of which is to ensure the financial penalties apply, even where a deposit is protected late, i.e. after the prescribed deadline, and where a tenancy (with which the deposit is associated) has ended.”

“A landlord now has 30 days within which to protect the deposit and provide information to the tenant about the protection scheme. This is an extension to the 14 days as originally prescribed by the Housing Act 2004. It will no longer be possible for a landlord to escape a financial penalty by complying with the legislative requirements just prior to a tenant’s application hearing. The amendments of the Localism Act have reversed the Court of Appeal decision of Tiensia”.

“The Courts also have the ability to set a financial penalty for non-compliance which can vary from between one and three times the sum of the deposit. It will be interesting to see how the Courts exercise their discretion in determining the level of the financial penalty. It is likely that the Courts shall take a proportionate approach and shall consider all of the circumstances presented by the landlord for not complying with the requirements and shall consider what, if any effect is caused to the tenant”.

“Where a tenant makes an application to Court on the grounds that the requirements of the tenancy deposit scheme have not been complied with or that they have been unable to obtain information, the Court must as it sees fit either:

Order the person holding the deposit or who appears to hold the deposit to repay it to the applicant;

Order the person to pay the deposit into the designated tenancy deposit scheme;
Order the landlord to pay to the applicant a sum of money not less than the amount of the deposit and not more than three times the amount within the 14 days”.