Here is a question to the Blog Clinic from Anthony who is a landlord
We have issued our tenant a section 21 and got him to sign that he had received it.
He has been to the local council who have stated the notice is not valid as when he began his tenancy his bond was not put in a government-backed scheme (my wife thought putting it in a savings account was enough).
His notice is due to end in a few days time. What can we do ?????
Answer
I am afraid the Council are right – you will need to serve a new section 21 notice (and wait another two months) after you have corrected the problems that have invalidated your first notice.
Despite the fact that they have been around since 2007 you are not alone in failing to understand and comply with the (very strict) tenancy deposit rules.
The rules say that all deposits must be protected in a government authorised tenancy deposit scheme within 30 days of receipt of the money AND that a notice giving prescribed information must also be served on the tenant during that time.
The three schemes are TDS, My Deposits and the Deposit Protection Scheme. An ordinary savings account is NOT sufficient.
There are two penalties for failing to comply:
- You cannot serve a valid section 21 notice, and
- Your tenant can bring a claim against you for up to 3x the deposit sum
There is nothing you can do about the second one other than hope that your tenants won’t bring the claim.
However, you will be able to serve a fresh section 21 notice (assuming that you have complied with all the other section 21 requirements) after you have refunded the deposit money to your tenant. Provided you are able to prove this if it is disputed.
You will find guidance and details of all the eviction rules (not just the deposit related rules) on my Landlord Law service.
Although as you are clearly not familiar with the system you may prefer to go to a specialist eviction company such as Landlord Action who will be able to advise you.
Following on from my piece last week on the language of renting, I notice that Anthony there has used the words deposit and bond interchangeably, which can cause confusion. Councils often use bonds, which is a guarantee of a deposit without any money changing hands but they also often pay deposits, which do need to be protected.
I often find council officers who set these things up also using the words interchangeably.
And Tessa, you say there “Despite the fact that they have been around since 2007 you are not alone in failing to understand and comply with the (very strict) tenancy deposit rules.”
Yes indeed, very strict but also very simple and basic. The tenant pays a deposit, the landlord protects it. Not for the first time in 11 years I find myself saying “How bloody hard can it be???”
“However, you will be able to serve a fresh section 21 notice (assuming that you have complied with all the other section 21 requirements) after you have refunded the deposit money to your tenant. Provided you are able to prove this if it is disputed”
Hold on, I wasn’t aware of this..! So there is a genuine chance that should the tenant be fully aware of his rights, he could claim triple his deposit due to the landlords negligence in issuing a correct S21?
Also, I didn’t know that the deposit has to be returned BEFORE a S21 can be issued? Is that right or am I misreading something?
Yes, that is correct, if you have not protected the deposit in time you have to refund the deposit money first, as a condition of being able to serve a valid s21 notice. And wait a minimum of another 2 months for the 2nd notice to expire.
The tenant can claim the penalty any time after the 30-day deadline has passed. This has to be via the courts though and the amount awarded is up to the Judge. The case here gives an indication of when the different amounts will be awarded https://landlordlawblog.co.uk/2015/07/14/tenancy-deposit-protection-and-points-from-the-khuja-v-chowdhury-case/
A landlord has to return the deposit *less any agreed deductions*.
There usually is room for negotiating agreed deductions as the main reason for landlords serving a ‘no fault’ section 21 is rent arrears.
The tenant can claim the penalty anytime after the 30 day deadline and before the 6 year statutory limit from the time in which the deposit should have been protected.
Hi Tessa, what happens if the tenant refuses to accept the deposit back (that wasn’t protected)?
My sister is stuck in this situation, she let her house out as she moved in with her partner the week the deposit scheme commenced and failed to protect tenants deposit. Her relationship has since broken down and she wants to move back into her house but is stuck in limbo as the tenant doesn’t want to leave hence, refusing the deposit return. Could she serve a section 8 (Ground 1) instead?
If you can prove that you have sent the cheque, and they have not cashed it within a reasonable time, then I think you should be all right. If the tenant is refusing to cash the cheque then that is not your sister’s fault. She has done all she can.
Or alternatively, she could cancel the cheque and then hand over the cash or post it through the letterbox with an independent witness as was done in this case https://landlordlawblog.co.uk/2013/04/09/my-landlord-has-returned-my-unprotected-deposit-can-i-still-claim/
Thanks Tessa, I’ll let her know