Potts v Densley case clarifies tenancy deposit rules for landlords
The High Court has now afforded even greater protection to landlords where they have failed to protect the tenancy deposit.
Most landlords who take deposits from tenants are required to register the deposit with a Government authorised deposit scheme (“ADS”).
Under the Housing Act 2004, the initial requirements of the ADS must be complied with within 14 days and prescribed information must be given to the tenant(s) about the ADS.
Where either one of these requirements is not carried out, the tenant can make a claim for compensation of a sum equal to three times the amount of the deposit.
In Tiensia v Universal Estates, the court confirmed that it is not the failure to protect the deposit within 14 days which is important, but the failure to protect it at all. The relevant time by which the deposit should be protected is the date of the court hearing.
However, the case did not address the situation where the claim for compensation was made after the tenancy had ended.
In Potts v Densley, the deposit was paid into an ADS two days after the tenancy had been terminated.
The tenant claimed that there had been a technical breach of the Act as it was not possible to comply with its provisions after the tenancy had come to an end.
The court noted that it was possible for the former landlord to comply with the requirements of the Act right up to the date of the hearing and confirmed that, even where the tenancy had ended, the former landlord was still ‘landlord’ for the purposes of the Act. As the landlords had eventually complied with the Act, they had a complete defence to the claim.
This decision will no doubt be of great relief to any landlords who find themselves in this position.
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By residential landlord solicitor, Alistair Gregory