The requirements to protect a tenant’s deposit in an authorised scheme are by now well known. However a recent decision by the High Court has determined that any sanctions imposed for failure to pay the deposit into an authorised scheme will be imposed on the party to whom the deposit is paid.
The sanctions for failing to pay a tenant’s deposit into an authorised scheme are set out in the Housing Act 2004 which provides that a tenant is entitled to compensation based on 3 times the amount of the deposit taken.
The decision has important implications for letting agents who commonly take deposits from tenants. It will be the letting agent and not the landlord who will be responsible for any compensation payments should the deposit not be paid into an authorised scheme.
Agents should look to ensure that systems are in place to promptly protect tenant’s deposits within an authorised scheme at the very least.
By commercial solicitor, Louise Hebborn