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Note: This is a 2010 county court case report. Tenancy deposit protection has changed substantially since: the time limit for protection and prescribed information is now 30 days, the financial penalty is a discretionary one to three times the deposit, and tenancy deposit obligations now interact with possession differently in each jurisdiction. The case is retained here for its analysis of the scheme's "initial requirements" and the impact on alternative dispute resolution. For current law, see our up-to-date deposit and possession guidance.
This case raises an interesting and vital point regarding compliance with the initial requirements of a tenancy deposit scheme. There is also a helpful example of disrepair contained within the case.
Nearlylegal has produced an excellent analysis of this case.
Ms Jones (the landlord) granted an assured shorthold tenancy to Mrs O'Brien (the tenant), and Mr Alexander was the agent. The tenancy ended on 19 December 2008 by agreement, and the tenant had withheld the last two months' rent due to alleged disrepair. The deposit (£950.00) was protected with the Dispute Service within 14 days, and (I think) prescribed information had been provided within 14 days but was amended before the hearing.
The tenant claimed that the prescribed information was incorrect because the landlord had provided the agent's address, which was also provided in the tenancy agreement (as allowed by s.48 Landlord and Tenant Act 1987). The tenant argued that the address required under the Housing (Tenancy Deposits)(Prescribed Information) Order 2007 must be the landlord's personal home address. The court held that the prescribed information order imposed no such requirement and that the agent's address was sufficient. (Which, it is submitted, is correct)
When a deposit is received in connection with an assured shorthold tenancy, the landlord must comply with the initial requirements of a scheme [s.213(3)].
"The initial requirements" of an authorised scheme are such requirements imposed by the scheme as fall to be complied with by a landlord on receiving such a tenancy deposit [s.213(4)].
In this case, the deposit was protected (within 14 days) with the Dispute Service.
Their scheme rules state (taken from the rules at the time of the case) [Highlights inserted by author]
8.2 For TDS this means that within 14 days of the tenant paying over a deposit to a member, whether or not the funds have been cleared:
8.2.1 the tenant(s) must have received the information specified in paragraph 14.2.3 by its inclusion in the tenancy agreement; and
8.2.2 the information specified in paragraphs 14.3 must have been lodged on the TDS tenancy database. Paragraph 8.2 comprises the initial requirements of the Tenancy Deposit Scheme (Housing Act 2004, Section 213 (4)).
14.2 states:
The regulations contained in The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 require The Dispute Service to provide certain information and documentation to Members to pass on to their tenants. This can be found in Appendix 4.
The information should be included in the tenancy agreement as specified in TDS G Clauses to be included in tenancy agreements and terms of business.
The documents will be provided by The Dispute Service Ltd, either in hard copy (for which there will be a charge fixed by the Board from time to time) or electronically, for Members to pass on to their tenants.
The landlord or agent had not included TDS G Clauses within their tenancy agreement as required by the scheme's initial requirements. Therefore, the tenant argued that the landlord or agent had not complied with the "initial requirements" of the scheme and was entitled to 3x the deposit as a penalty (at the time of this claim, the penalty was fixed at 3x the deposit).
The landlord and agent argued that the missing TDS G clauses were a mere technicality and that the tenant was not prejudiced, as they contained no further significant information. After all, the landlord had already provided the prescribed information, the tenancy agreement, the inventory, and the appropriate tenant leaflet explaining the deposit scheme.
Correspondence between the tenant and the Dispute Service revealed that, due to the breach of the TDS G clauses, the free alternative dispute resolution was not available to the tenant. So the tenant was unable to use this free service.
The court held that the landlord was in breach of the initial requirements of the scheme and therefore in breach of section 213(3) Housing Act 2004 and ordered the return of the deposit plus three times the deposit as compensation, totalling £3800, but offsetting the two months' unpaid rent.