Always Use Protection – Deposit Protection Service schemes
This isn't quite accounting or tax related but if you are a landlord or tenant and party to an assured shorthold tenancy agreement, this should be useful.
Two months ago, I was given notice by my landlord to leave the property I was renting. Neither I, nor the other tenants had a contract as we had moved in at different times and we knew little about our rights as tenants. We were worried about the lack of contract and inventory check when we had moved in and despite requesting information regarding the deposit protection scheme , we hadn't heard anything from the landlord.
I decided to undertake some research as well as having an informative chat with the very helpful people at Morrisons Solicitors, so the following is for information purposes only and is valid at time of writing.
"As part of the Housing Act 2004 the Government introduced tenancy deposit protection for all assured shorthold tenancies (ASTs) in England and Wales where a deposit is taken…The legislation aims to ensure that tenants who have paid a deposit to a landlord or letting agent and are entitled to receive all or part of it back at the end of that tenancy, actually get it." – Deposit Protection Service (DPS) website.
There are two types of DPS schemes – custodial or insurance. The former being where the deposit is safeguarded throughout the period of the tenancy by the DPS and repaid to the appropriate parties, the latter being where the landlord retains the deposit and protection is provided for the duration of the tenant for a fee. Any disputed amounts at the end of tenancy must be retained in the respective schemes until the dispute has been resolved.
As a result of the Localism Bill 2011, from 6th April 2012, section 213 of the Housing Act 2004 requires deposits for all ASTs in England and Wales to be protected within 30 calendar days of receipt by the landlord and for tenants to be given the prescribed information relating to the scheme, within the same time period.
If a deposit is not protected, within one of the two government-authorised schemes, under section 215 of the Housing Act 2004, a landlord does not have to issue a section 21 notice to the tenants. In other words, the landlord cannot evict the tenants without reason at the end of their tenancy agreement or during a periodic tenancy. This differs from a section 8 notice which is served on the tenant by a landlord wishing to regain possession of a property during the fixed term of an AST.
If a landlord has failed to comply with s213, then a tenant may apply to the Court under s214 of the Housing Act 2004 in relation to non-protection of the deposit and/or for non-provision of the prescribed information. You may apply to the Court even if you have received the deposit back in full and/or your tenancy has ended. Penalty claims should be made under Part 8 of the Civil Procedure Rules, not in the Small Claims Court. This means that the costs can be claimed even if the amount claimed is under £5,000. The penalty to be paid to the tenants, will be between 1 and 3 times the deposit, to be decided by the Court.
You can pick up an N208 form at your local County Court office or download it online here. You have to pay a fee to the Court to start your claim – this is usually a fixed amount plus a percentage of the amount you are claiming from your landlord. You will be able to claim this back from your landlord if you win, but if you don't win you will lose your Court fee.
With the benefit of hindsight I would recommend getting a solicitor to review the initial AST agreement and assist when making any claim – the peace of mind is worth the additional cost!