I recently reported on the case of Tiensia v Universal Estates, a case concerning the Deposit Protection Regulations that was found in the favour of the landlord.
Very briefly, the Regulations appeared to suggest that if a landlord did not protect a tenant’s deposit in a relevant scheme and also provide the tenant with certain information then the tenant ought to be able to demand three times their deposit from the landlord as compensation. The case of Tiensia said that provided the landlord complies with these Regulations by the time any case brought by the tenant reaches court, then the landlord will be let off the hook.
The only question that Tiensia did not address was what happens if the tenant sues the landlord for three times his deposit, but by the time the case comes to trial the tenancy has already ended. If this happened, then the landlord would not be able to pay the deposit into the Protection Scheme, presumably because the Protection Scheme only accepts deposits from ongoing tenancies.
The Court of Appeal considered this question in Gladehurst Properties Ltd v Fareed Hashemi and, once again, found in favour of the landlord. The Court said that the relevant section of the Housing Act only needed to be complied if they are “still capable of being complied with”. What this means is that once a tenancy has ended, the landlord is no longer able to comply with the scheme and therefore the combined effect of Tiensia and Gladehurst is that the Regulations concerning deposits have been watered down to the extent that they have very little effect at all.
As far as I can see, the only problem a landlord would face if he didn’t pay a deposit into the scheme, is that they would not be able to serve a section 21 notice on the tenant (this is a notice that landlords use to terminate a tenancy). There is therefore an argument that landlords no longer need to bother complying with the Regulations concerning deposits unless they are either needing to serve a section 21 notice on the tenant or unless the tenant brings proceedings against the landlord, at which point they could always comply with the Regulations at that point.