Failing to protect a deposit: The sanctions | 2 of 3

By Ruth Jago on

Yesterday we looked at ‘Tenancy Deposit Schemes: Landlord Obligations’, why deposits need protecting and the Landlord’s requirements.

But what happens if a Landlord fails to protect the deposit or comply with the other requirements?

Unfortunately for Landlords, the sanctions can be fairly severe.

There are two general sanctions:

1 – Landlords are prohibited from serving Section 21 Notices
  • Where the deposit is not held in unauthorised Tenancy Deposit Scheme or where the initial requirements have not been complied with, a Section 21 Notice cannot be served.
  • A Landlord cannot serve a Section 21 Notice where the prescribed information has not been given.

This can leave landlords who have failed to comply with a situation where they are not able to evict their tenants unless they are in breach of their tenancy agreement.

2 – Financial Penalties

If a Landlord does not comply with the various requirements, a Tenant may make an application to the County Court who may impose financial penalties on the Landlord.  If the Court is satisfied that the Landlord has not complied with his obligations:

  • If the tenancy still continues, the Court must either make an Order that, within 14 days from the date of the Order, the Landlord repays the deposit to the Tenant; or that within 14 days from the date of the Order, the Landlord pays the deposit into a Tenancy Deposit Scheme.
  • If the tenancy has ended, the Court may Order the Landlord to repay all or part of the deposit to the Tenant within 14 days of the Order.

On top of this, the Court must also order the Landlord to pay the Tenant a sum of money equal to between one and three times the amount of the deposit.

The Court has a discretion as to how much to award, and it will generally depend on the failings of the Landlord and whether it was a flagrant disregard for the rules or an innocent mistake.

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