Deposit Legislation
by David Carter on 21 September 2011
Written by Christopher Thomas, partner at Allen Barfields Solicitors
Kill Bill Volume III (or how the Courts killed the Deposit Legislation)
A frequent complaint of residential tenants was the difficulty they had getting their Landlord to pay back the deposit at the end of the Tenancy.
A few years ago parliament introduced legislation to protect the deposit and provide a way of resolving disputes between landlords and tenants.
Legislation
Section 212 to 215 of the Housing Act 2004 introduced the compulsory protection of a deposit within 14 days of its receipt backed by the sanction of a civil fine equivalent to three times the deposit.
Early Days
Take up was apparently initially slow, particularly amongst landlords who were not using a Letting Agent. As time went on take up grew as the Court started penalising landlords. In short landlords realised this was serious stuff.
Court of Appeal
Unfortunately the legislation was poorly drafted and inevitably cases started being looked at by the Court of Appeal.
Last year the Court of Appeal decided that a landlord could protect the deposit at any time up to the hearing of the Tenant’s claim for the penalty.
Then earlier this year, the Court of Appeal decided as a tenant could not even bring a claim once the Tenancy had come to an end (which is of course when a tenant would turn his mind to the deposit).
Thus a Landlord could ignore the legislation unless or until a current tenant threatened to bring a claim.
To Parliament Again
Needless to say Parliament is having another go using the Localism Bill as the vehicle to do so. Nothing of course is certain until an Act has been passed.
Advice
The best advice to landlords is to continue to protect a deposit rather than run the risk of falling foul of a vigilant tenant. In addition, the Courts will still want proof of protection of the deposit before making a Possession Order after the contractual Tenancy has come to an end.
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