In March 2011, additions were put forward to the commons committee for insertions into the Localism Bill which would amend the tenancy deposit legislation in particular because of the recent Court of Appeal decisions (Tiensia v Vision Enterprises Ltd (t/a Universal Estates) and between Honeysuckle Properties v Fletcher [2010] EWCA Civ 1224 and Gladehurst Properties Ltd v Hashemi & Anor [2011] EWCA Civ 604)

The proposed amendments included:

  • Making it clearer that a deposit must be protected within 14 days (unlike currently where this is more akin to a period of immunity)
  • Clarifying that a renewal after 2007 even though the deposit was received before TDP legislation took effect would require protection (which County Court has already ruled [Bihari v House Trader (UK ) Limited. 14 January 2010, Central London County Court])
  • If a landlord takes over a tenancy (perhaps from purchasing a property for example) and the deposit is not protected, the new landlord would become liable for protection within 14 days.
  • Instead of a flat fine of three times deposit regardless of circumstances, instead “The court must also order the landlord to pay to the applicant such additional sum of money as it shall consider reasonable being not less than the amount of the deposit nor more than three times the amount of the deposit within the period of 14 days …” “In determining the sum of money payable by the landlord …, the court shall have regard to all the circumstances, and in particular—(a) the landlord’s reasons for his failure to comply with his obligations …;(b) whether the landlord knew, or ought to have known, of his obligations; and(c) the length of time taken by the landlord in complying with his obligations.” “In considering the extent of the landlord’s knowledge … the court shall assume that the landlord knew, or ought to have known, of his obligations unless the contrary is proved

However, the problem with these amendments, in particular because once 14 days has passed a fine is payable, it would also mean (as currently drafted and proposed) that a section 21 notice could NEVER be served. As Andrew Stunell pointed out:

As the Court of Appeal pointed out, under the tenancy deposit protection legislation as currently drafted, it could be argued that once a landlord has failed to protect a deposit, they would be unable to use section 21 in connection with that tenancy, even when they had subsequently protected the deposit and, where appropriate, paid the fine imposed by the court. That outcome is not the intention of the legislation, and we are therefore clear that any amendments aimed at tightening up the requirement to protect tenants within 14 days must also address that point.

Therefore, the proposed amendments in current form were withdrawn. Transcript available here

Nearly Legal has since reported (here) that Lord Best has reintroduced the same amendments into the House of Lords. We shall have to wait and see what amendments are made if any.