Section 213 of the Housing Act 2004 introduced the legal requirement that any deposit taken from a tenant under an assured shorthold tenancy had to be placed in an authorised tenant deposit scheme within 14 days and certain procedural requirements followed, including notifying the tenant of the scheme. Section 214 imposes a penalty on the landlord for failing to comply with the Act with the landlord facing the prospect of paying compensation to the tenant and potentially being deprived of the right to seek possession until the requisite procedural requirements have been complied with.

 

A recent Court of Appeal decision in Tiensa v Vision Enterprises Limited (2010) EWCA Civ 1224 appears to have given landlords a “get out of jail free card” as the Court held that so long as the landlord complied with the procedural requirements at anytime up to the time of the hearing brought by the tenant, the landlord will have a defence to a claim under Section 214. This leaves the tenant risking costs in making a claim under Section 214 as at the last minute the landlord could take steps to comply. As not all costs are guaranteed to be recovered the tenant may find themselves with a shortfall in costs to be paid.

 

Head of Residential Conveyancing and Partner, David Wallis says “This is good news for landlords but bad news for tenants. Tenants who have paid a deposit to their landlord expect it to be paid into an authorised scheme and to have protection. If the landlord does not do so the legislation provides a remedy and compensation. This Court case casts doubt on whether such compensation will still be available and whether the tenant can block possession proceedings. It seems that so long as the landlord does what is required, even at the last moment, it would seem that they will be free of liability.”