Sections 213-214 of the Housing Act 2004 require landlords to protect deposits received from assured shorthold tenants using an approved tenancy deposit scheme. However, the obligations imposed by the legislation are twofold. In addition to protecting the deposit, section 213(5) requires landlords to provide tenants with prescribed information about the way in which their deposits have been protected.
Suurpere v Nice [2011] EWHC 2003 (QB) underlined the importance of complying with both these requirements. Suurpere preceded the enactment of section 184 of the Localism Act 2011, which dealt with well-publicised shortcomings in the legislation. However, section 184 did not make any changes to the rules governing the information that landlords must provide to their tenants to comply with Article 2 of the Housing (Tenancy Deposits) (Prescribed Information) Order 2007.
The Court of Appeal upheld Suurpere in Ayannuga v Swindells [2012] PLSCS 236. It explained that provision of the prescribed information is just as important as the duty to safeguard a deposit, because the information provided enables tenants to understand how the tenancy deposit scheme chosen operates and how to recover the deposit at the end of the tenancy without resorting to litigation.
The court decided that it was irrelevant that tenants might be able to obtain the information from the scheme itself. The landlord has a statutory duty to provide the information and Parliament must have enacted the requirements for a reason. Therefore, the court can order landlords to return a tenant’s deposit and to pay a penalty for failure to comply with the information requirements, even though a deposit has been fully protected using an approved scheme and the tenancy agreement contains some information about the circumstances in which a deposit will be returned or used in the event of a breach.
The court noted that the landlord had failed to comply with the information requirements within the period prescribed by the legislation. The period was originally set at 14 days, calculated from the date on which the deposit is received by the landlord. However, section 184 of the Localism Act 2011, which came into force on 6 April 2012, extended the period for compliance to 30 days.
Section 213(6) requires the landlord to provide the information “in the prescribed form, or in a form substantially to the same effect”. It is a matter of fact and degree whether there has been substantial compliance with the requirements. The landlord had failed to comply with the requirements in this case because the information provided in the tenancy agreement did not explain the procedural provisions in the deposit scheme itself, as is required by the legislation. Consequently, the tenant was entitled to have his deposit back and was also awarded a penalty payment, equal to three times the amount of his deposit, both of which were to be paid within 14 days.
A surprising number of landlords and letting agents fail to comply with the information requirements. The paperwork may appear lengthy and daunting. However, this decision confirms that compliance is essential to avoid the sanctions prescribed by the legislation.
Allyson Colby, Property Law Consultant
