Most landlords are aware that they are required under the Housing Act 2004 to pay any deposit they receive from a tenant into an authorised scheme within 14 days of receipt. They are also required to inform the tenant of the identity of the scheme.
The legislation has caused some confusion because it states that if either of those requirements have not been complied with then the court must order the landlord to pay three times the deposit to the tenant within 14 days.
This sanction has caused quite considerable debate. Landlords claim that the penalty is draconian and tenants believe that landlords should be aware of the rules so should ensure that they comply with them!
The issue has arisen that landlords sometimes believe that they can avoid this penalty by paying the deposit, or giving the tenant the required information, outside the 14 day period but before the hearing of any proceedings that the tenant might bring against the landlord to recover three times their deposit. There have been various conflicting decisions across the courts with some judges believing that the landlords can get away with doing this, whilst others have been saying it is a requirement that the deposit had to be paid in within time and that paying it to a scheme late is not acceptable.
The uncertainty is likely to be resolved by a case known as Universal Estates –v- Tiensia which was heard at the Croydon County Court. This case is going to the Court of Appeal and they will shortly be providing a judgment that will hopefully clear up this otherwise uncertain area of law.
If you are a landlord or a tenant and are faced with this situation, or any other matters arising out of a tenancy, then contact Veitch Penny Solicitors on 01392 278381 and we are happy to offer a free half hour consultation.
Please note: This article does not constitute legal or other professional advice and should not be relied on as such. You should take specific advice regarding your circumstances before taking any action based on the information contained within this Update.