Question: Will late registration prevent repossession?
I granted an assured shorthold tenancy for one year to my tenant in September 2012. The rent is payable monthly. The tenant has not paid rent since February 2013 and I want to recover possession. I forgot to register my tenant’s deposit at the start of the AST but I have recently registered the deposit (in January) and provided the tenant with the prescribed information. Will the fact that I only registered the deposit recently affect my ability to recover possession?
Answer
You have breached section 213(3) of the Housing Act 2004, which requires you to comply with the “initial requirements” of a tenancy deposit scheme within 30 days of receipt of the deposit. If the tenant counterclaims for this breach, the court must order you to pay the tenant an amount between one and three times the deposit (section 214(4)).
The breach would not prevent you from serving a notice seeking possession under section 8 of the Housing Act 1988, provided that you can establish one of the grounds set out in Schedule 2 to that Act. You could seek to rely on ground 8, ie, that at least two months’ rent is unpaid (the threshold where rent is payable monthly); and grounds 10 and 11 (discretionary grounds relating to non-payment of rent and persistent late payment).
Ground 8 is a mandatory ground, so, provided that there are at least two months’ arrears owing, the court should order possession. However, the court may be reluctant to do so where the tenant has a counterclaim under section 214 that could be set-off against the arrears.
The court has held that an equitable set-off for an unquantified amount may be allowed against a claim for rent (British Anzani (Felixstowe) Ltd v International Marine Management (UK) Ltd [1979] 1 EGLR 65) and that damages awarded for a landlord’s breach of repairing obligations could be deducted from arrears by way of equitable set-off (Connaught Restaurants Ltd v Indoor Leisure Ltd [1993] 2 EGLR 108).
In Baygreen Properties Ltd v Gil [2002] EWCA Civ 1340; [2002] 3 EGLR 42, Clarke LJ said he considered that “the rent ‘lawfully due’ from the tenant is the rent after deduction of the amount of any equitable set-off”.
The tenant is likely to argue that you should only recover possession under ground 8 if the arrears are over the two-month threshold after the tenant’s section 214 claim has been set-off. You should check the lease terms to see whether any right of set-off is expressly excluded. Even if the arrears do not meet the ground 8 threshold you could still ask the court to exercise its discretion in your favour and grant possession on grounds 10 or 11.
Question: What information must I give on deposit scheme?
I have placed my tenant’s deposit in a custodian scheme and notified the tenant of the identity of the scheme and the custodian trustee. I am aware that the scheme administrator has written a letter to the tenant confirming that the scheme holds his deposit, and enclosing a leaflet containing information about the scheme. Do I also need to give the tenant details about how the scheme operates, or can I leave the tenant to find these details out from the scheme administrator?
Answer
Sections 213(5) and (6) of the Housing Act 2004 require a landlord to give the tenant prescribed information within 30 days of receiving a deposit under an AST. Article 2 of the Housing (Tenancy Deposits) (Prescribed Information) Order 2007/97 prescribes what must be provided including, under Article 2(c) to (e), information about procedures that apply under the scheme for repayment of the deposit at the end of the tenancy; where either party is not contactable at the end of the tenancy; and where the landlord and tenant dispute the amount that is repayable.
Ayannuga v Swindells [2012] EWCA Civ 1789; [2012] PLSCS 236 highlights the importance of strict compliance. Here, the landlord placed the deposit in a custodian scheme and gave the tenant details of it but failed to give the information prescribed by Article 2(c) to (e). The landlord argued that the core purpose of section 213 was to safeguard the deposit, which had been done. The information omitted essentially concerned matters of procedure, the tenant and her lawyers knew the omitted information anyway or could easily find it out, and the landlord had complied substantially with the requirement to provide information. Rejecting these arguments, the Court of Appeal stressed that the obligation is imposed on the landlord, who cannot rely on the tenant’s knowledge or the availability of the information from other sources. Although “procedural”, the categories of information are related to a core aim of the tenancy deposit scheme, which is to “facilitate the resolution of disputes” (see section 212(2)(a)) and must be provided. As the landlord had not substantially complied with his obligation to provide the prescribed information, he was liable under section 214 to pay the tenant a sum equal to three times the deposit.
Ayannuga was decided under the previous version of sections 213–215. Following the amendments introduced by the Localism Act 2011 (reversing Vision Enterprises Ltd (t/a Universal Estates) v Tiensia [2010] EWCA Civ 1224; [2010] 3 EGLR 53), a landlord who does not comply with the above obligations within 30 days will risk a claim by the tenant for payment of a sum between the amount of the deposit and three times that amount.
Jessica McGoldrick is an associate at Charles Russell LLP and Robert Duddridge is a barrister at Enterprise Chambers
Questions can be e-mailed to egq&a@charlesrussell.co.uk and egq&a@enterprisechambers.com