Thread: TDS eligibility, implication of breach and legal questions answered

Hi all,

Just thought I would create a sticky to clarify for people a few things to do with TDS. I am going to create three parts:

Eligibility for TDS
Breaches and effects of breaches by landlord of TDS legislation
Various legal questions and answers

I wont touch on enforcement, as I believe this has been adequately covered in other stickies. Also, it is a work in progress over next couple of days so bear with me, and if you think I have got anything wrong or missed something, please do PM me and I will get it changed!




Eligibility for TDS legislation

You are eligible for TDS protection if you meet the following two criteria only:

- You have an Assured Shorthold Tenancy (AST)
- You paid a deposit(of any kind) after 6th April 2007 OR
you have signed a new AST/fixed term agreement to renew an existing tenancy after this date, where there is a deposit held in respect to the tenancy

Key notes regarding eligibility point 1

It is important to note here that it is ONLY AST tenants who are eligible, and whether you are an AST tenant or not is dependant upon the actual tenancy, as opposed to what agreement is signed.

Realistically this does not affect many tenants, but it does explicitly remove two specific groups of people from eligibility:

- Lodgers (who are licensees)
- Anyone whos tenancy is worth more than £25000 a year in rent for the tenancy AS A WHOLE (i.e. not individual rent)

Key notes regarding eligibility point 2

There are two specific inclusions here.

The first is that you are a "new" tenant, who has paid their deposit on or after the 6th of April 2007 - the important thing here is that the date of commencement of tenancy is irrelevant - it is the date that you pay the deposit that is important.

The second is if you have renewed your tenancy after this date. This is valid if you have signed a new agreement only - so called "rolling tenancies" (statutory periodic tenancies) are not eligible for TDS rules.

In either case, it is wholly irrelevant what the landlord "calls" the deposit. There are some reports of landlords calling deposits something other than a damage deposit to attempt to circumvent TDS rules, but TDS specifies any tenancy deposit is covered. It is also worth noting that any such deposits MUST be "money".

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Reserved for:

Breaches and effect of breaches by landlord of TDS legislation

In order to know what the landlord can breach, we need to know his obligations under the TDS rules.

The main overriding obligation is for any deposits which are eligible(see above) the landlord MUST place any deposit in an approved tenancy deposit scheme.

The two sub-obligations to this are:

- The tenant must receive notification of which TDS the deposit is held in within 14 days of paying the deposit, and...
- This information must be in the prescribed format as required by the TDS

Therefore, we can see there are effectively four possible breaches:

a) Landlord has not placed the deposit in a scheme
b) Landlord has supplied details, but not in the prescribed format
c) Landlord has placed the deposit in a scheme, but has not supplied this information to the tenant at all
d) Landlord has placed the deposit in a scheme, has supplied the information, but not within the required 14 day timescale

(NOTE: should the landlord have provided information, but you have not been able to confirm this information with the TDS scheme the deposit is held in, then it is to be taken that the landlord has NOT provided the information).


There are three possible consequences of tenancy breach:

1) Landlord being unable to evict a tenant via the Section 21 method
2) Landlord being forced to place a deposit into a scheme via a court order. (Alternatively, they could be forced to repay this to the tenant, especially in the case where the tenant has already ended their tenancy).
3) Landlord being forced to give the tenant three times the value of the deposit in compensation

We shall deal with each in turn.

Breach a), if still in place at the time of going to court, has NO OPTION but to lead to consequences 1, 2, AND 3. It is important to note here that, for all some people seem to think the HA 2004 is ambiguous, there is absolutely no leeway on this. The Housing Act quite clearly and unequivocally states that should the court not be satisified that the deposit is held in a scheme, the court MUST order the payment of the deposit to either a scheme or the tenant, AND that the tenant must receive 3x the value of the deposit in compensation from the landlord.

Breach b), is in fact exactly the same. The housing act is again very clear that failure to satisfy the court that the required prescribed information has been given, must result in all three consequences.

Breach c) is effectively the same as breach b) - as clearly if no information has been given, then the information has not been issued in a prescribed format.

Breach d) is the breach that is currently seen most frequently. Close reading of the HA 2004 shows us that, in fact, the Act does NOT allow for ANY of the consequences to be applied in this situation. As such, their is currently simply no enforcement of the 14 day timescale, other than this is the minimum time you must leave it prior to pursuing the landlord through court for enforcement of the other three breaches.

With this in mind, there is clear advice to give. Should at the time of you considering court action to enforce TDS rules, you have in fact already received notification in the prescribed form, then such a court action would be a complete waste of time.

Reserved for:

Various legal questions and answers, and current case history

Kindly supplied by Just4Let

TDS section 213 prescribed information.


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 under an approved scheme.

Landlords also need to provide certain prescribed information to the tenant explaining how the tenant's deposit has been protected.

This information has also to be given to any third party / interested party (i.e. someone who has paid the deposit on behalf of the tenant whether in whole or part). For example, a parent who pays the deposit on behalf of a student tenant.

What information do I need to provide?

The Government sets out within Statutory Instrument 797 of 2007 the information that the landlord is required to provide.

In summary of 213 prescribed information is as follows:

The details of the scheme administrator e.g. The Deposit Protection Service
Any information contained in a leaflet supplied by the scheme which explains how it operates
The procedures in relation to holding and repaying the deposit and the resolution of any dispute
Amount of deposit paid
The address of the property to which the tenancy relates
The landlords details
The tenants details
Third party details if appropriate
The circumstances when all or part of the deposit may be retained by the landlord, by reference to the terms of the tenancy

What happens if I don’t provide the prescribed information?

The answer is simple. If you fail to provide this information within 14 days of taking the deposit then the same legal penalties apply to you as if you had not protected the deposit itself. Failure to provide the prescribed information means that you are potentially liable as Landlord to a penalty of 3 times of the amount of deposit and in the meantime no valid section 21 notice to obtain possession can be served.
The message is clear. Just like ensuring that you need to use one of the approved schemes in taking tenants deposits you also need to provide your tenants with this prescribed information

No - you've missed the context

(7)No person may, in connection with a shorthold tenancy, require a deposit which consists of property other than money.
(8)In subsection (7) “deposit” means a transfer of property intended to be held (by the landlord or otherwise) as security for—
(a)the performance of any obligations of the tenant, or
(b)the discharge of any liability of his,

No worries

Originally Posted by Planner

The tenant shouldt except it if legal action has already commenced.

I guess you mean "accept it"?

Why? Does not accepting the deposit mean you accept the money as Full and final settlement?

Although my question was more around the interpretation of this....

Thanks...

Does the agreement specify they can increase the rent during the course of the tenancy.

cds