I am constantly being contacted by landlords who have just discovered that they did not protect their tenancy deposit in time and are unable now to serve a valid section 21 notice.
Basically, they want me to tell them that the tenancy deposit rules do not apply to them. But this is not something I am able to do.
There are no exceptions and no excuses
So this means that they will still apply if:
- It was your agent who forgot to protect the deposit, not you (you should have chosen a better agent)
- You agreed with the tenant to accept payment of the deposit in stages and did not protect the first payment as you were waiting for the second payment (tip – NEVER agree to accept deposit payments by instalments)
- You are just an ordinary person and did not know about the tenancy deposit rules (tip – if you want to rent property, either use a decent agent or get some training)
- You fell under a bus and were hospitalised before you could protect the deposit and were in a coma for four weeks (sadly this is no excuse under the law, sorry)
and so on.
The Tenancy Deposit Scheme Rules
- The deposit must be protected with a government-authorised tenancy deposit scheme AND
- prescribed information must be served on the tenant and/or whoever paid the deposit
- within 30 days of payment.
The consequences of not protecting are as follows:
You will have NO defence to a claim by the tenants for the penalty. The only thing the Judge will have to decide is the amount of the penalty award to give the tenant (it will have to be between 1 and 3x the deposit sum)
You will not be able to serve a valid section 21 notice on the tenant unless you have refunded the deposit money first UNLESS a claim has been made by the tenants for the penalty which has been resolved.
If you refund the money, you cannot deduct any money owed to you by the tenant without their consent (tip – get their consent in writing otherwise how will you prove that they agreed if they later deny this?)
If you have just forgotten to serve the prescribed information, if you serve this after the 30 days you CAN then serve a valid section 21 notice (although I understand that some Judges will still expect you to refund the money) but this will not protect you from a claim for the penalty award by the tenants.