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Tenancy Deposit Schemes – is their bark worse than their bite?

Despite previous suggestions to the contrary, the recent case of Suurpere v Nice has demonstrated that courts will not shy away from imposing the sanctions contained in the tenancy deposit scheme where landlords have been given an opportunity to remedy an earlier breach.

Tenancy deposit schemes were introduced in 2007 to safeguard all deposits paid under assured shorthold tenancies. With the increase in the rental limits for assured tenants in October 2010, these schemes now have much wider application. The sanctions for non-compliance with the requirements of the scheme appear strict; providing for the landlord to pay a penalty of three times the amount of the deposit to the tenant. However, recent cases, such as Tiensia v Vision Enterprises Ltd (t/a Universal Estates) effectively removed the teeth from this sanction by concluding that, where a tenant issued proceedings for non-compliance, the landlord had until the date of the hearing to comply with its obligations retrospectively.

In the case of Suurpere v Nice, the tenant was granted an assured shorthold tenancy for a fixed term of six months with monthly rent of £300 and a deposit of £500. The tenancy commenced and the deposit was paid on 6 January 2009. Relations between the parties quickly turned sour and the landlord tried several times to evict the tenant but failed to serve a valid notice. Furthermore, the landlord did not transfer the deposit to a deposit protection scheme until 20 July 2009, having been prompted to do so by a letter from the Citizens Advice Bureau, sent on the tenant's behalf. Shortly thereafter, the tenant issued proceedings, claiming both return of the deposit and a penalty sum equal to three times the deposit, on the basis that the landlord had neither protected the deposit nor provided her with the 'prescribed information' (as set out in the tenancy deposit scheme regulations) within 14 days of receipt. The tenant then left the premises on 14 August 2009, claiming wrongful eviction by virtue of unlawful harassment by the landlord.

This article was first published in Residential Property Investor in December 2011.

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