I Haven’t Protected My Tenants Deposit Into A Scheme With In 14 Days
This article was written on 02 Oct 2009
I received this email earlier today. It’s an interesting question, with a rather ropey answer (which works in the favour of the landlord):
I have one property. My tenant has been with me for the last 2 years. Initially via an agent. Agents were charging a fortune and were no good, so I took it on myself. Deposit was registered via the agent. When I took over, the deposit was transfered to my account. We have signed a new tenancy agreement for 12 months, but I have simply forgotten to protect the deposit, and its been three months since the start of the agreement. I am a member of the mydeposits, but I am afraid that if I proceed to protect the deposit, then that will raise the tenants attention (in terms of taking legal action for not protecting within 14 days), and they could hold it against me. Right now they are happy (polish) tenants and I don’t want to rock the boat.
Any ideas?
Thanks for your time.
Alf
Ok, firstly, this is what the House Act 2004 says:
213 Requirements relating to tenancy deposits
(3) Where a landlord receives a tenancy deposit in connection with a shorthold tenancy, the initial requirements of an authorised scheme must be complied with by the landlord in relation to the deposit within the period of 14 days beginning with the date on which it is received.
So there is no question, a deposit needs to be protected with in 14 days where a tenancy deposit in connection with a shorthold tenancy.
What’s the penalty for not securing the deposit?
This is what the house act says about that:
214 Proceedings relating to tenancy deposits
(3) The court must, as it thinks fit, either-
(a) order the person who appears to the court to be holding the deposit to repay it to the applicant, or
(b) order that person to pay the deposit into the designated account held by the scheme administrator under an authorised custodial scheme, within the period of 14 days beginning with the date of the making of the order.
(4) The court must also order the landlord to pay to the applicant a sum of money equal to three times the amount of the deposit within the period of 14 days beginning with the date of the making of the order.
This is where it gets interesting (in my geeky opinion). If, before the court case, the landlord has either repaid the deposit to the tenant or protected it, then the court cannot order what has already been done. If the court cannot make an order under s214(3), then s214(4) doesn’t apply.
Conclusion
So from my understanding (from what I’ve read), a landlord cannot be prosecuted for not securing a deposit with in 14 days as long as the deposit is protected or returned before a court hearing. Someone please correct me if I’m wrong.
In any case, it’s imperative that a landlord DOES protect deposits. It’s actually a good scheme, and prevents all kinds of problems.
So, if I were Alf, I wouldn’t worry because it sounds like a genuine mistake, and I would definitely secure the deposit sooner than later. The tenants would probably understand, consequently wouldn’t even think twice about it.
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