TDS Legal Update S213
Landlords who take a rental deposit should already know that since the introduction of the Tenancy Deposit Scheme in April 2007 that they are required by law to use one of the Government’s approved schemes.
One of the less well known aspects of the Tenancy Deposit Scheme (TDS) legislation is that not only does it require the landlord to protect the tenant’s deposit but that they
also need to provide a list of prescribed information to the tenant explaining how the tenant’s deposit has been protected. The so called section 213 notice
Failure to do so could lead to a fine of 3 times the deposit amount and for landlords not to be able to serve a section 21 notice.
Tenancy Deposit Scheme (TDS) Test Case
ONE of the first cases concerning the 2007 tenancy deposit protection scheme and more specifically the prescribed information set out in Statutory Instrument 797 was heard recently.
The County Court overturned the findings of the first instance judge, to find in favour of the landlord.
The landlord in question had properly placed his tenant’s deposit in a tenancy deposit scheme but had not informed the tenant about the details of the scheme within the statutory 14 days, Sheffield County Court heard (Harvey v Bamforth, Sheffield County Court)
The statutory penalty is three times the deposit for failure to register or protect the deposit.
The County Court judge ruled that in this case the failure to provide information on time did not mean that the penalty was payable because the information was still provided before the tenant submitted his application.
Legal clarification for landlords
This legal decision is an important one for landlords as the Citizens Advice Bureau said there were hundreds of similar cases waiting to be heard.
The judgment clarified that provided the landlord supplies the certificate and other prescribed information without delays outside the 14-day statutory limit, he will not breach the Act.
The scheme compels landlords to hand over deposits to a third party or have an insurance scheme cover it. The tough new laws apply to all landlords who let property under an assured shorthold tenancy.
All deposits are protected and the tenant has to be provided with details of the scheme within 14 days. If the landlord fails to protect the deposit, the tenant can apply for a court order requiring the deposit to be protected, or for the prescribed information to be given to him or her.
Property Hawk comment
Chris Horne Editor of one of the UK’s leading landlord website comments.
“We welcome this ruling. It represents a bit of common sense from the judiciary. Landlords are slowly being snowed under from the rising tide of beauracracy. It is unfair on landlords who are often inundated with a whole string of small tasks when a new tenant takes occupation that they have to pay a 3 month fine if they are unfortunate enough to forget to post on time the section 213 information to their tenant.”
Property Hawk has made the whole process of gathering all the information needed for the section 213 notice simple through it’s FREE Property Manager. Just by registering, a landlord can produce a fully filled out section 213 notice that is ready to be printed off and handed straight to the tenant.