This is blog relates to deposits paid by tenants of residential property let under Assured Shorthold tenancies.

Section 214 Housing Act 2004 provides for protection of deposits by paying them into a registered deposit potection scheme within 14 days, with a penalty for not doing so of payment of 3 times the deposit to the tenant. Courts have interpreted the legislation in uch a way as to remove most of its teeth, for example in the 2010 Court of Apeal decision Universal Estates v Tiensia  [2010] EWCA Civ 1224.  The Courts have held that a landlord can “protect” a deposit late, and even that a tenant cannot claim in respect of an unprotected deposit after the tenancy has come to an end.

This is all going to change from 6 April 2012, as section 184 of the Localism Act 2011 amends the Housing Act 2004 with the following effects:

1. Landlords now have 30 (previously 14) days to protect the deposit and provide the tenant with the statutory information

2. If that doesn’t happen, then nothing the landlord does with the deposit after that 30 day period will be a defence to a s.214 claim by the tenant.

3. If a s.214 claim is made, the landlord will have to protect the full deposit(or refund it) and pay between one and three times the deposit to the tenant. (The Court will decide the sum between those limits but it has no discretion to order no paent  at all.)

4. A tenant whose tenancy has come to an end will still have a cause of action under s.214.

5. If the deposit was not properly protected within 30 days of the start date of the tenancy, then the landlord cannot claim for possession based on a s.21 Housing Act 1988 notice unless he refunds the deposit in full (less any deduction that the tenant will agree) beforehand.

6. Any tenancy in existence as of 6 April 2012 will be caught by the amendments and landlords have 30 days – until 6 May 2012 – to protect a previously unprotected deposit.