How should a landlord protect a tenant's deposit?
The Housing Act 2004 sets out the deposit protection legislation requiring that any deposit paid by a tenant must be secured in a government-approved tenancy deposit protection scheme within 30 days of the funds being transferred to the landlord.
The recognised government-approved schemes are:
Once the deposit has been protected, you must serve the prescribed information to the tenant within the same 30-day period. This information must confirm which scheme you have used and include:
- The amount of the deposit.
- The address of the property.
- The name, address and contact details of the administrator of the tenancy deposit scheme holding the deposit.
- The name, address and contact details of the landlord, the tenants and any third parties who contributed to the deposit.
Failure to protect the deposit or supply the prescribed information correctly can lead to penalties and limit your ability to serve a valid Section 21 notice in the future.
Can I be fined for not protecting the deposit?
As soon as you become aware of the tenancy deposit legislation, you should protect your tenant’s deposit in one of the approved schemes and provide the prescribed information without delay. However, even if you take these steps after the deadline has passed, you may still be required to pay compensation if your tenant decides to pursue legal proceedings through the local county court for the period when the deposit remained unprotected.
The court can order you to pay a fine of up to three times the original deposit amount for each tenancy where the deposit was not correctly secured. You may also be required to pay the court fee if the matter proceeds to a hearing.
In addition, the court can order you either to return the deposit to the tenant or to pay it into a property redress scheme within 14 days of the order being made. Tenants are entitled to pursue a claim for compensation for up to six years from the date the deposit should have been protected.
Can I still evict a tenant if the deposit wasn't protected?
You can still pursue eviction if the deposit was not protected, but your options will be limited. If the deposit remains unprotected, you cannot serve a valid Section 21 notice, which is the eviction process commonly used for no-fault evictions when you simply wish to regain possession of the property.
However, you may still be able to serve a Section 8 notice if there are clear grounds, such as unpaid rent, persistent late payment, damage to the property or other breaches of the tenancy agreement. The specific reasons must be clearly detailed in the notice, and you will need supporting evidence to demonstrate that the grounds are valid.
While an unprotected deposit does not normally prevent you from proceeding under Section 8, the court may take the failure into account when considering your claim. This could affect the outcome, particularly if the judge feels your conduct has been unreasonable or the tenant has suffered detriment as a result.
If you are in this situation, it is strongly recommended that you seek professional guidance before taking further steps.
Will unprotected deposit cases always go to court?
Not all cases involving unprotected deposits will automatically proceed to the legal process in court. In many situations, your tenant may first choose to write to you formally to notify you of the breach. This letter often sets out the basis of their claim and may include terms for negotiation, giving you the opportunity to resolve the matter without legal proceedings and avoid court fees.
The letter may state:
- That you have not complied with the Tenancy Deposit Scheme rules.
- That they are entitled to claim compensation of between one and three times the value of the deposit if the matter goes to court.
- What steps you must take to avoid further action, for example returning the deposit or protecting it and providing the prescribed information.
Tenants will usually request that you respond within a notice period of 21 days. If you fail to reply or do not address the breach, they can start court proceedings to seek compensation.
If you receive a letter of this nature, it is advisable to act promptly. AST Assistance can help you assess your position and respond effectively to reduce the risk of further action.
How AST Assistance can help with compliant deposit management and evictions
We support landlords in understanding how to deal with deposit breaches and possession claims with clarity and confidence. If you failed to get a tenant's deposit protected according to the legislation or have received a claim from a tenant about an unprotected deposit, we can advise you on the most effective way to respond and help you reduce the risk of financial penalties.
If you need to help pursuing a possession claim for your property but have failed to protect the deposit in a scheme, or your tenant is in rent arrears and you wish to recover the money owed, we can guide you through the correct legal process from start to finish.
Our experienced team has in-depth knowledge of the Housing Act and all relevant UK legislation governing tenant deposits, eviction procedures and landlord responsibilities. We will work with you to protect your interests and help you move matters forward efficiently and in full compliance with the law.
To discuss your situation in confidence, contact AST Assistance today on 01706 619954 or fill in our online contact form.
