The ‘Localism Bill Tenancy Deposit’ Changes – which came in to effect on 6th April 2012, are still not being fully complied with by many letting agents – this leaves them, and their landlords open to unnecessary risk.

The bill will increase the time a landlord has to register the deposit from 14 days to 30 days but the bill also removes all the current case law defences to not registering the deposit on time.

Positive Number 1 – Compensation No Longer 3 x Deposit

The compensation for non compliance will no longer be fixed at 3 times the deposit but will be between 1 and 3 times the deposit amount, the exact amount being at the judge’s discretion.

Positive Number 2 – New 30 Day Limit for Compliance

The tenant must be provided with proof of the deposit protection and the Prescribed Information within this 30 day limit by the landlord or agent.

If the deposit isn’t protected on time, the courts will be able to order the landlord or agent to pay the tenant between one and three times the deposit amount as penalty in addition to ordering the return of the actual deposit. 

If the deposit is not protected and the information provided any section 21 Notice will be still be invalid. In addition the landlord/agent will also be unable to seek possession of the property using a Section 21 notice until the penalty awarded is settled and the information provided.

Landlords need to be aware that tenants can make a independent claim without any possession proceedings being commenced and by doing so could potentially delay any action brought via a section 21.   

Positive Number 3 – The Role of the Agent

The bill recognises the role of the agent in respect of taking and registering deposits but the liability remains with the landlord should the agent cease to trade.

An additional change of note is that a tenant can make a claim after the tenancy has ended should they discover that the regulations had not been followed in respect of that tenancy.
Once again if the regulations have not been followed there is no defence to the claim and the amount awarded will be at the courts discretion. 

All Landlords and Agents need to be aware that there is likely to be increased scrutiny of the deposit information from April and all deposits must be registered within the 30 day limit or sanctions will be applied by the courts.

The key question however is “how proactive will the courts be”
…. unfortunately we will have to wait and see.        

For more information contact our legal team
Free phone on 0800 840 7133