From 6 April 2012, there is a new procedure to be followed in respect of serving a section 21 notice if a deposit has been received but not protected within 30 days. In addition, prescribed information must be considered before serving a section 21 notice.
Deposit Protected but no (or incorrect) Prescribed Information Given
Prescribed information is relatively straight forward if a deposit has been protected perfectly fine, but the prescribed information has not been given, or not all the information has been provided. In this case, the information may be given at any time even after the 30 days and the section 21 notice may be served after. [section 215(2) Housing Act 2004] (not linked as not yet updated on the government legislation website).
Please note that despite the guidance below, if a tenant makes a claim, the landlord will have to pay compensation if 30 days has been missed and there is no defence to this. The amount payable will be between the amount of the deposit and up to three times deposit [section 214(4) Housing Act 2004].
Follow these steps for prescribed information
- Download our assured shorthold tenancy agreement for the scheme of your choice (F002 – Deposit Protection Service, F003 – MyDeposits).
- Ignore the first pages which are the tenancy agreement and the last two pages which are the guarantee agreement. This leaves you the prescribed information only.
- Complete all the prescribed information completing all boxes (including for example, telephones, emails, post tenancy address etc.)
- Print 3 copies. Retain one in your file. Post other two to the tenant obtaining a proof of postage from the post office (free of charge). A covering letter should ask the tenant to sign both copies and return one to you. Don’t worry if they don’t return a copy (that’s why you’ve put one in your file). The law requires you give the tenant “the opportunity” to sign the prescribed information.
- If there is a “relevant person” (person who paid the deposit on behalf of the tenant) then, send a further copy to them asking them to sign.
- Allow at least 3 – 4 days for delivery.
- Serve section 21 notice
Deposit Not Protected Within 30 Days
Where the deposit either hasn’t been protected at all, or wasn’t protected within 30 days, then, no section 21 notice may be served until a new procedure is followed as described in the newly added sub-section 2A of section 215 Housing Act 2004.
Now, a section 21 notice may only be served if:
(a) the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant, or
(b) an application to a county court has been made under section 214(1) and has been determined by the court, withdrawn or settled by agreement between the parties.
In reverse, (b) above is dealing with the situation where the court has already ordered payment of the penalty to the tenant in respect of a failure to protect the deposit. Therefore, if the landlord has had the penalty imposed, he may then serve a section 21 notice without doing anything further.
The part that is of main interest is (a) above. Now, if a deposit has not been protected within 30 days, the landlord must either repay the deposit in full to the tenant or agree deductions with the tenant perhaps for example by offsetting the deposit from unpaid rent.
It is submitted, the agreement part will be strict, so for a landlord to simply say it was agreed verbally will not be sufficient in our view. We have prepared a useful form for the purposes of obtaining an agreement for deductions from the tenant (F053).