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Is ten years too late to claim the penalty for an unprotected deposit?

This post is more than 5 years old

July 14, 2020 by Tessa Shepperson

flatHere is a question to the blog clinic from Andrew (not his real name) who is a tenant:

I am a tenant and have been served with a section 21 notice to leave the property.

Our deposit was never secured in a tenancy deposit scheme, which I’ve known about for a while. I have never requested our deposit be placed in a TDS or returned through fear of retaliation and eviction. We have now lived here for over ten years.

Have we missed our opportunity to demand the deposit is returned and seek compensation (not that we’re looking to do this), or do we have a claim as we’ve lived here using the same agreement during this time?

Answer

If your landlord has failed to protect the deposit then:

  • Your landlord cannot serve a valid section 21 notice until the deposit money has been returned to you, but
  • You have almost certainly lost your chance to claim the penalty

Dealing with the last item first, which is the main basis of your question, your claim will probably be ‘statute barred’ by now.

Claims need to be brought within a certain period of time, under the Limitation Act 1980. The time period for a claim for the deposit penalty is six years. So your time to bring a claim for the penalty ran out four years ago – sorry.

However, the section 21 notice served by your landlord is invalid as the deposit has not been protected.  So you have a valid defence to any claim he may bring based upon it.

The only way your landlord can serve a valid section 21 notice is to refund the whole of your deposit payment to you first.

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Notes:

Please check the date of the post - remember, if it is an old post, the law may have changed since it was written.

You should always get independent legal advice before taking any action.

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Comments

  1. alan armstrong says

    July 14, 2020 at 8:37 am

    Is it statute barred as the offence is still being committed.

    • Ben Reeve-Lewis says

      July 14, 2020 at 1:11 pm

      S5 Of the Limitation Act states:-
      “An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued”

      Our argument is that the “Cause of action” would kick in on day 31. I dont think the continuing offence argument would wash. Mind you, having said that, I’ve obtained arrest warrants against landlords for illegal eviction, on the basis that although the lock change has already happened, the fact that the tenant cant get back in, means its a continuing offence, so maybe you have a point Alan. One for the lawyers though

  2. Ben Reeve-Lewis says

    July 14, 2020 at 11:51 am

    Agree, he’s 4 years out of time but worth noting here that the 6 year limitation is taken from the breach, not when the deposit was paid. So effectively there’s 30 days to add to it. We’ve got two cases going through court at the moment where this is the case

  3. Jacqui Swann says

    July 14, 2020 at 4:43 pm

    If there was a fixed term, the periodic tenancy that followed would constitute a new tenancy. This would trigger the requirement to secure the deposit and provide the prescribed information again. Under S215B (1) and (2) of the Deregulation Act 2015 the obligation to deal with the deposit again after the end of the fixed term is only waived where the deposit was dealt with appropriately at the start of the original tenancy. How long was the fixed term?

    It may also worth thinking about whether the AST was executed as a deed rather than a simple contract where limitation may be 12 years.

  4. Lawcruncher says

    July 18, 2020 at 9:27 am

    The right to the “compensation” arises under statute. The limitation period for sums recoverable by statute is 6 years from the date on which the cause of action accrued. In the absence of any additional obligation imposed by the tenancy agreement, the failure to protect is not a breach of contract. It is unclear from the Housing Act 2004 when time starts to run. It could be (a) the date the deposit is paid, (b) the expiry of the time limit to secure protection, or (c) the expiry of the tenancy. I am not aware of any decision on the point.

  5. John says

    July 23, 2020 at 12:13 am

    An argument I’ve heard suggested by a penalty claims firm, given that this appears to be, as yet, untested in court, is that it is quite possible for the tenant not to be aware that the deposit was supposed to be protected (for example if he was not given the “How to Rent” booklet). He might therefore not become aware of the failure of the landlord or agent to perform their legal duty to protect (and indeed of their duty as professionals to inform the customer, by way of the ‘prescribed information’, of his right to have had the deposit protected) until the point where he tries to retrieve his deposit only to find that the landlord then demands various bogus deductions. This is the point where a lot of tenants suddenly feel hard done-by so it is often the very first time that they start to enquire about their rights regarding the deposit, which would only ever usually be on ending of their occupation of the property. Had the ‘prescribed information’ been served as required by law then the tenant WOULD have been informed of his rights. So the failure to inform creates the situation whereby the landlord benefits by the tenant remaining ignorant until the six-year time-limit has run out.

    This creates a scenario whereby an unknowingly disadvantaged tenant can lose the right to remedy the as yet unknown disadvantage by the effluxion of time. Does the law have any provision for this kind of situation?

    As a comparison the recent case involving gas certificates still seemed to make a breach unfixable at any time in the future if the gas certificate was never actually obtained (as opposed to being fixable if it originally existed but was simply not shown to the tenant prior to occupation).

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