In a previous article we highlighted the importance of protecting a rent deposit received from a tenant, whether by paying it in to an approved scheme or by joining/registering with an insurance backed scheme. The details of how the deposit has been protected and who to contact in the event of a dispute must also be provided to the tenant (the Prescribed Information).
Failure to take these steps can result in the tenants bringing a claim against their landlords for breach of this obligation, which is likely to result in the court ordering the landlord to pay to the tenant 3 times the amount of the original deposit, by way of penalty fine. Additionally, a notice served requiring possession of the property will not be valid if the deposit has not been protected and the tenants provided with the Prescribed Information.
The purpose of the scheme is to protect tenants from landlords unreasonably withholding part or all of the deposit. The schemes have adjudication services which deal with disputes where the landlord proposes to retain part or all of the deposit as a result of the tenant leaving the property damaged and/or dirty.
All of the above has been recently publicised as a result of 6 students, who rented a property for a university term, taking their landlord to court. The initial issue was the landlord’s failure to return the deposit in full for seemingly unjustified reasons, e.g. “light dust on window sill” and “bin lids not shut”. The students challenged the charges but were referred to the deposit scheme. It was then discovered that their landlord had failed to sign the scheme certificate and provide the Prescribed Information to the students. The landlord was fined a sum twice the original deposit and ordered to pay the court costs for the students, despite having repaid the deposit in full prior to the final hearing.
In addition to properly protecting deposits, both landlords and tenants should ensure that they thoroughly inspect the property both at the start and conclusion of the tenancy. Photographic inventories of condition can be vital evidence if one claims the other to be at fault, ideally, both parties should inspect and sign the same inventory at the beginning and end of the tenancy.
For additional information on this article please contact Frances Woods, Solicitor on 01905 721600 or via email email@example.com.