Current Property News: Tenant must be advised correctly or Landlords will pay.

By Steve Roulstone

A Court of Appeal decision has confirmed that Landlords not only need to register Tenants deposit under the Tenants Deposit Protection legislation, but that they must provide Tenants with the Prescribed Information in connection with the scheme the money is protected with, or the courts now have a clear case confirming exactly what will happen should they fail.

Old News

Back in February this year, I confirmed the changes introduced by the Localism Act 2011 which was introduced in April this year. The changes surround not only when protection needed to be registered by, but also what was delivered to the Tenant in how we register deposits.

PI

The Prescribed Information is what was under review in this case, after a Landlord had failed to supply the data to the Tenant even though the deposit was protected. In fact in the original court decision, he thought the courts agreed with his stance, that the purpose of the legislation was to protect the money and that had been achieved. The Tenant on appeal, has won on the basis that protection MUST be accompanied by the information surrounding the Tenants rights and how to act to protect his money.

Fine.

The penalty is both full refund of the initial deposit and a fine to the value of three times this same amount. This is of course significant and places before anybody who felt otherwise, that the need to protect deposits is only half of the intended actions required under the act. But it is not just when the deposit is initially received that action needs to be taken.

End of fixed term.

Under the Localism Act, it also became clear that in clarifying how the legislation should work, new documents need to be given with every new Tenancy. This means, when a Tenancy ends its initial fixed term, new information needs to be given. The fine for failing to do so, is as was awarded in this case, three times the deposit.

Solution.

There is only one! Do things the right way to start with, understand the requirements and put in place a system that ensures all Tenants receive the data at the start of the Tenancy, as well as with any new agreement signed. This alone should be easy, if a Tenant is signing an agreement, hand out the scheme rules surrounding the deposit. If you then add a system that does the same when an agreement becomes periodic (Treated as a new agreement in the Localism Act) and ensures Tenants get the updated information at this time, you will be covered. But always, if in doubt? Ask!