Residential News

Tenancy deposit changes will ‘give law more teeth’

08 Dec 2011

Tenancy deposit protection schemes will have more teeth, once changes are implemented next April, says a lawyer.

Olivia Tassell, a property lawyer at Boodle Hatfield, said that courts will be more likely to enforce the new regulations, which come under the Localism Act.

The changes to the Deposit Scheme regulations have been puzzling agents and landlords, as they appear to relax the requirements, giving 30 days to comply and allowing the courts discretion to award a penalty of between one and three times the deposit amount, should they fail to do so.

This is in contrast to the existing legislation which requires compliance within 14 days and contains a non-negotiable penalty of three times the deposit for non-compliance.

The Government’s aim behind these changes appears to encourage the courts to enforce the regulations by making their requirements fairer.

Tassell said: “The tenancy deposit scheme has been criticised by many for being too harsh on landlords.

“Recent case law shows that the courts have been reluctant to enforce the legislation, perhaps because the only penalty open to them was a fine equivalent to three times the deposit, irrespective of the severity of the breach.

“The courts have appeared to seek ways round the legislation, resulting in the regulations being taken less seriously by some landlords.

“Landlords will welcome the extension in time to comply with the scheme, and whilst the courts may be more willing to enforce the regulations, the penalties are likely to be less harsh.

“Furthermore, those landlords who have historically prided themselves on their compliance with the regulations will take comfort in the fact that they should now be enforced more rigorously across the board.”

Welcoming Parliament’s clarification of the tenancy deposit legislation, the Chief Executive of the Tenancy Deposit Scheme, Steve Harriott, said, “I am pleased the Minister, Grant Shapps MP, managed to find the parliamentary time to get these amendments to the legislation through. The recent court decisions were causing confusion about tenancy deposit protection regulations. These amendments make it clear that tenancy deposit protection is here to stay.” 

The changes have yet to come into force and publication of the commencement order is awaited. Full details of the changes are available in new guidance notes issued by the Tenancy Deposit Scheme and can be seen here:

http://www.tds.gb.com/resources/files/The%20Housing%20Act%202004%20and%20the%20changes%20introduced%20by%20the%20Localism%20Act%202011.pdf

 

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