Tenancy Deposit Scheme – some relief for landlords

14 January 2011

The Court of Appeal in Tiensa v Vision Enterprises Ltd has decided that a landlord will not be penalised as long as he has protected the tenant’s deposit by complying with the initial requirements and given certain prescribed information to the tenant by the date of any court hearing rather than 14 days after receiving the deposit.

A landlord has been obliged to protect a tenant’s deposit for an assured shorthold tenancy (AST) entered into on or after 6 April 2007 by placing it with a designated scheme and giving certain prescribed information relating to the deposit to the tenant within 14 days of having received the deposit from the tenant. If the landlord failed to do this, the Housing Act 2004 gave the court power to impose sanctions on the landlord including a fine equal to three times the amount of the deposit and restricting the ease and ability of the landlord to recover possession.

In this case, the tenant brought proceedings against the landlord in relation to the deposit and non compliance with the statutory requirements. The court decided by a majority that the purpose of the legislation was to protect a tenant’s deposit rather than to punish landlords for failure to comply strictly with the legislation – particularly where to do so might be for reasons outside their control. Accordingly, they decided that compliance by the landlord by the date of any hearing (rather than within 14 days of receipt of the deposit) was sufficient. 

This decision arguably robs the legislation of its principle objective. Ultimately, however, its intention will have been realised, namely, to make provision to ensure that the tenant’s deposit is properly protected.

For further advice on these issues, please contact Gary Finniss

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