Assured Shorthold Tenancy Rent Deposits

The Current Law

The current statutory framework is contained in the Housing Act 2004:

It only applies to residential assured shorthold tenancies. The landlord must place the deposit in an authorised scheme within 14 days and also provide the tenant with prescribed information about the scheme. If the landlord fails to do so, in any court proceedings the court must order the landlord to pay a sum equal to the deposit either to the tenant or to an authorised scheme, as the court shall decide, and a penalty of three times the deposit. The Act remains in force, but the legal position has become confused by recent judicial decisions.

Recent Decisions

In Tiensia v Vision Enterprises Ltd (t/a Universal Estates) and Honeysuckle Properties v Fletcher and others, the landlord failed to place the deposit in an authorised scheme and provide the prescribed information within 14 days of receipt of the deposit. Nonetheless, the Court of Appeal held that, because the landlord had done so by the court hearing date, the landlord had complied with the requirements of the 2004 Act and no penalty was payable.

In Potts v Densley and another, the High Court held that a landlord was not liable to pay the tenant a penalty of three times the deposit, even though the deposit had not been placed in a tenancy deposit scheme until after the tenancy had ended. This was followed by Gladehurst Propertes Ltd v Hashemi, in which the Court of Appeal held that an application cannot be made for a landlord to pay the penalty once the tenancy has expired.

In Suurpere v Nice, the deposit was transferred to the deposit scheme late but before the tenant's claim was heard, and by the date of the hearing the tenant had left the property and the deposit had been returned to the tenant. However, the landlord was ordered to pay the tenant the penalty, because he...