Our thanks to Bahareh Amani-Kholsari of SSP Law for this interesting County Court possession/deposit case. As per s.215(2A), if a deposit was not protected in the required time, no s.21 notice can be served until the deposit has been returned to the tenant (subject to all the Deregulation Act changes…). So when is a deposit returned? This is a non-binding County Court decision, but interesting and I think right on the date of return point.
Chalmiston Properties Ltd v Boudia. Barnet County Court 27 October 2015
Mr B was the assured shorthold tenant of Chalmiston. The tenancy was for 6 months from 10 September 2008. After that term , it became a statutory periodic tenancy. A deposit of £780 was paid at the start of the tenancy.
On 14 February 2015, Mr B received a s.21 notice (actually deemed served on 12 February 2015). A possession claim was issued.
What had happened with the deposit was less than clear. No prescribed information had been served, either at the start of the tenancy or on the statutory periodic arising. It was not apparent when the deposit had been protected, but at some stage it had been put in the DPS scheme.
It then transpired that on 10 February 2015, the landlord had sent a request to DPS to release the deposit to the tenant. On 12 February 2015, DPS had told the landlord that the deposit was released by direct credit to the tenant. However, the credit to the tenant’s own account took place on 16 February 2015.
The tenant successfully argued that the deposit had not been returned as required by s.215(2A), so the s.21 notice was invalid – it could not be served. The possession claim was dismissed.
The key point to take from this is that ‘returned’ is clearly arguable as meaning exactly that. Not ‘released to’ or ‘on its way to’, but actually received by the tenant. The landlord here jumped the gun by sending a s.21 notice on the same day that they requested that the DPS release the deposit, but even relying on the DPS saying the deposit had been sent to the tenant would not have worked.
Any thoughts on when a deposit is still held by the DPS (other schemes are available) and the landlord returns an equivalent sum of money?
So if a case had been brought against a landlord for not providing the legally required documentation (i.e. PI etc.) then the deposit has to be returned? And if not, any subsequent section 21 is invalid until the deposit is returned?
No… If deposit was protected in time, but PI late/not served/incomplete, late service of PI enables s.21 to be served, without return of deposit.
But if s.214 claim underway for failure to protect, then deposit must be returned or final order made to enable s.21
S.214 claim being a claim for sanction? Or simply a claim against the PI not being served/late/incomplete etc.?
Eh? S.214 being the penalty claim.
Basic point is:
Deposit not protected in time/at all – must return deposit to serve s.21 (does not escape possible penalty claim)
Deposit protected in time but PI not served/incomplete/outside 30 days – can serve s.21 after late service of PI (but this does not escape possible penalty claim)
Deposit was registered on time (~2015), but not fully (~60% of it were registered with TDS). Section 21 was served after tenancy rolled into periodic, but was invalidated when we pointed out that deposit was not protected. TDS was updated to full deposit amount, and new Section 21 was served. Would section 21 still be invalid until deposit is repaid back in full?
I’d say so. Outside 30 days for full deposit.
Don’t understand how a Sec 21 can be served if Deposit protected in time But P.I NOT served w/i 30 days ?
My understanding was that ALL the requirements of the deposit legislation (including serving P.I w/i timescales ) Had to be complied with or No Sec 21 till Deposit returned. ?
No. The PI can be provided late (but before the s.21 served). There would still be a claim for the breach of deposit regs penalty, but it doesn’t invalidate the s.21. It is the deliberate effect of s.215(2) Housing Act 2004 (as amended)
The deposit can’t be protected late, certainly. Has to be returned in those circs.
Any thoughts on when a deposit is still held by the DPS (other schemes are available) and the landlord returns an equivalent sum of money?
Hmm. S.215(2A)(a) says ‘the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant’. Where it is money, it clearly doesn’t make sense for it to have to be ‘the same money’.
That said, if it is a custodial scheme, I can see the question. The landlord would need the tenant’s consent, or at least confirmation of having receiving the sum, to have the sum held by the DPS to be released to the landlord.
Tricky. Could see that going either way. The obvious response to a challenge would be that the tenant has had the benefit of the sum of the deposit.