If the tenant under a shorthold tenancy pays a deposit (often called a "rent deposit") on or after 6 April 2007, the landlord must comply with the Housing Act 2004 in relation to that money.
A deposit paid before that date is NOT protected by the Act, even if the tenancy is renewed after that date by the signing of a new tenancy agreement. (This was the decision in the only reported case on the point: see
TENANCY DEPOSIT CASE (Section 213 HA 2004))
The Act applies to any money intended to be held (by the landlord or by someone else, e.g. the letting agent) as security for the tenant's compliance with the provisions of the tenancy agreement. For example, money held as security for the tenant paying the rent and keeping the premises in good repair.
The Act requires the landlord to give the tenant written notice in a prescribed form, containing the details of the particular tenancy deposit scheme by which the deposit is protected.
That notice must be given to the tenant within 14 days of the date the deposit is paid, except that in the case of a formal renewal the 14 days runs from the date of the new tenancy agreement.
The landlord can only arrange to be part of the scheme during those 14 days. Therefore he cannot later rectify a failure to comply.
Details of the Housing Act 2004, relating to Tenancy Deposit Schemes, are on-line at
Housing Act 2004 (c. 34) Two Types of Tenancy Deposit Scheme
There are two types of tenancy deposit scheme: a custodial scheme, and an insurance scheme. The landlord can use either type.
A custodial scheme is where the landlord pays the deposit into a designated account held by a scheme administrator, and the money is held by the administrator instead of by the landlord.
An insurance scheme is where the landlord holds the deposit on the basis that, at the end of the tenancy, any amount in dispute will be paid to a scheme administrator, and the administrator takes out an insurance policy against any failure by the landlord to do so.
A summary of each type of scheme is set out below. For the details, see Schedule 10 of the Housing Act 2004 at
Housing Act 2004 (c. 34)
In both types of scheme, the administrator is an independent third party, authorised under the Act to manage that type of scheme:
Who runs the tenancy deposit protection schemes? : Directgov - Tenancy Deposit Custodial schemes
The landlord must pay an amount equal to the tenant's deposit into a designated account held by a scheme administrator.
The administrator normally keeps the interest that accrues on the money, to fund the cost of the scheme.
When the tenancy ends, under a custodial scheme the tenant can apply to the administrator for the whole or part of the deposit to be paid out to the tenant.
If the tenant and the landlord agree on the amount to be paid to the tenant, the administrator will pay it within 10 days.
If the Court decides who the money is payable to, once the decision has become final (i.e. the time for making an appeal has run out), the administrator will pay the money out within 10 days, in accordance with the Court order.
A Court decision becomes final —
(a) if not appealed against, at the end of the period for bringing an appeal, or
(b) if appealed against, at the time when the appeal (or any further appeal) is disposed of.
An appeal is disposed of —
(a) if it is determined and the period for bringing any further appeal has ended, or
(b) if it is abandoned or otherwise ceases to have effect.
Insurance schemes
The landlord must give the scheme administrator an undertaking to comply with the administrator's instructions concerning repayment of the deposit to the tenant.
The administrator then takes out an insurance policy, against any failure by the landlord to comply with the administrator's directions.
The landlord's membership of the scheme can be terminated by the administrator if he fails to comply with the administrator's directions, which may harm the landlord's ability to let properties.
The landlord pays a fee to the administrator towards the cost of the scheme, and also contributes to the cost of the insurance policy.
Additionally, the administrator normally retains any interest accruing on the money, to help fund the cost of the scheme.
When the tenancy ends, under an insurance scheme the tenant notifies the administrator once he has requested the landlord to repay the whole or part of the deposit, if the landlord has not done so within 10 days of the request.
The administrator must then direct the landlord to pay an amount equal to the disputed amount to the administrator within 10 days.
Once the Court has decided who the disputed amount is payable to and the decision has become final, or the tenant and landlord have agreed who the disputed amount shall be paid to, the administrator must pay out the money he holds in accordance with the decision or agreement, within 10 days; and the administrator must also direct the landlord to pay the difference (if any) to the tenant, to be paid within 10 days.
Request by Tenant for Confirmation
Both in a custodial scheme and an insurance scheme, the scheme administrator is required to respond quickly to any request made by a tenant for confirmation that a deposit paid in connection with his tenancy is actually protected by the scheme.
A prudent tenant will
always contact the scheme administrator to check this point, to ensure the landlord has not lied about having complied with the 2004 Act.
The administrator's name and address are part of the details contained in the prescribed notice (refered to above) which the landlord must give the tenant.
Specimen letter:
"Dear Sir,
I am a tenant of residential premises at (address), under a Shorthold tenancy.
On (date) I paid a rent deposit of £____ to the landlord, whose name is (name of landlord), and he has given me notice under the Housing Act 2004 that my deposit is protected by a Tenancy Deposit Scheme of which you are the administrator.
I request you to let me know within the next 10 days whether my rent deposit is protected by your scheme.
Yours faithfully,
Signed: (Name of tenant)"
Note: The tenant will send the above letter, duly completed with the actual details of the case, to the scheme administrator by 1st class post. It is prudent to date the letter, and to add the tenant's name in BLOCK CAPITALS. If handwritten, make sure it is legible!
Alternative Dispute Resolution
Every custodial scheme and every insurance scheme provides facilities for resolving disputes without recourse to the Court, though the use of those facilities is not compulsory.
For more information see this link:
Resolving disputes: Tenancy deposit scheme : Directgov - Tenancy Deposit Application to the Court
The tenant can make an application to the County Court if the landlord has not protected the deposit, on the grounds that —
• the statutory requirements have not been complied with; or
• the tenant has been notified by the landlord that a particular authorised scheme applies to the deposit, but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in the scheme.
The statutory requirements will not have been complied with, for example, if:
• the landlord is not using an authorised scheme to safeguard the deposit; or
• the landlord has joined a scheme, but has not complied with the requirements of the scheme, so the deposit is therefore not protected by the scheme; or
• the landlord has failed to provide the tenant with the required information about the scheme and deposit, or has failed to do so within the first 14 days of the tenancy.
If the statutory requirements have not been complied with, the Court must:
• order the person who appears to it to be holding the money to either repay it to the tenant or pay it into an authorised deposit scheme, and that person must do so within 14 days; and
• order the landlord to pay the tenant
three times the amount of the deposit, which must be paid within 14 days.
If the statutory requirements have not been complied with, the tenancy can't be terminated under section 21 of the Housing Act 1988 (giving of two months notice), only under section 8 of the 1988 Act (which requires the landlord to show good cause, e.g. rent arrears, disrepair, or breach of an express provision of the tenancy agreement).
The Court can also order any non-monetary deposit to be returned to the tenant by the person holding it, as it is unlawful to demand a non-monetary deposit.
A claim for three times the amount of the deposit (under section 214(4) of the 2004 Housing Act) might not succeed if the deposit has been protected or repaid before the court hearing takes place, even if it was not protected when the claim was begun. This is because the court can only make an award under section 214(4) if it has made an order for repayment or protection: the Act does not provide for it to make an award under section 214(4) where the deposit has
already been refunded or protected (see
http://resource.nusonline.co.uk/medi...ement_pack.pdf).
However, protecting the deposit after being sued will not save the landlord if the tenancy has ended; for in that case the court has power to make an order for the repayment of the deposit to the tenant, which will give it jurisdiction to make a penalty award under section 214(4). The landlord could only protect himself by making repayment of the deposit in full to the tenant, before the hearing date.
Before starting a Court claim, the tenant should read the thread at
TDS Court Claims Wording - Possible Sticky? and should decide whether to make the claim on form N208 or on form N1. Complete whichever is appropriate, then send a photocopy of the completed form to the landlord with a Letter Before Action: in the letter give him 14 days to pay up, and threaten to submit the form to the County Court on the 14th day if he doesn't. If he hasn't paid at the end of that time, send the claim to the Court. The Court fee for an N208 claim is £150, but the Court fee for an N1 claim depends on the amount being claimed.
Award to Tenant
Details of an actual decided case won by a tenant under section 213 of the Housing Act 2004 (on the tenant's claim for the landlord to pay a penalty of three times the amount of the deposit, for breaching the Tenancy Deposit Rules) is posted at:
TENANCY DEPOSIT CASE (Section 213 HA 2004)
In awarding the money, the County Court judge accepted the tenant’s argument that the award was a strict liability penalty, and that consequently there was no scope for any counterclaim by the landlord for outstanding rent arrears or for the cost of damage or disrepair at the property.
This was Stankova v Glassonbury, decided on 10th March 2008 in Gloucester County Court (case number 8GL00457).
Further Information
For further information see this link:
Tenancy Deposit : Directgov Note
This posting gives general guidance only. It is not an authoritative statement of the law. Consult a solicitor for specific advice before deciding on any course of action.
Advice & opinions on this forum are offered informally, without any assumption of liability. Use your own judgment. Seek advice of a qualified and insured professional if you have any doubts.
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