The Localism Act 2011 (Commencement No. 4 and Transitional, Transitory and Saving Provisions) Order 2012 provides the transitional provisions relating to tenancy deposit schemes and the changes made by the Localism Act 2011. We have already reported on the significant changes to take effect from 6 April 2012 but until now we didn’t know what the position would be with existing or previously unprotected deposits. Would the changes only apply to new deposits received after April or, will the changes apply all the way back to first introduction in 2007 or will it be something in the middle?
It seems the answer is: something in the middle.
Obviously the changes apply to deposits received in connection with an assured shorthold tenancy where the tenancy was in effect on or after 6 April 2012.
The changes will NOT apply if a tenancy is in effect on or after 6 April 2012 and the deposit has been protected and prescribed information given before the end of 30 days from 6 April. Therefore, a landlord (or agent) will have until midnight 5 May 2012 (to be safe but I suspect it could be the 6th) to have any current unprotected deposits protected and prescribed information given.
The new rules will not apply to any unprotected deposits where the tenancy ended before 6 April 2012.
It is imperative therefore that if landlords or agents are holding an unprotected deposit in relation to a tenancy which is in effect on 6 April, that deposit must be protected by 5 ( / 6th) May 2012. It is also worth landlords and agents checking the prescribed information they have issued is correct.
Full details of the changes are here but in summary, the changes are:
- The time for protecting a deposit is increased from 14 days to 30 days
- The time for supplying the prescribed information is also increased from 14 days to 30 days
- The time limit of 30 days will be absolute and protection (or providing prescribed information) after 30 days will not prevent a penalty being payable to the tenant [authors note: but by doing so albeit late may well reduce the penalty]
- The penalty payable will be between the amount of the deposit and up to three times deposit as the court sees fit
- A former tenant may make a claim for the penalty so overturning the decision in Gladehurst Properties Ltd v Hashemi EWCA Civ 604.
- If a landlord has failed to protect within 30 days, the landlord may only serve a section 21 notice by repaying the deposit in full, making deductions that are “agreed” with the tenant or if an application for the penalty has been determined.
- If a landlord has protected the deposit within 30 days but failed to provide the prescribed information, then it would seem late providing of the prescribed information is permissible in order to then serve a section 21 notice.
The appropriate parts of the commencement order are shown below:
Provisions coming into force on 6th April 2012 in relation to England and Wales
Subject to articles  the following provisions of the Act (so far as they are not yet in force) come into force in relation to England and Wales on 6th April 2012—
(c) section 184
Tenancy Deposit Schemes
—(1) Subject to paragraph (2), the amendments made by section 184 apply in respect of any tenancy deposit received by a landlord in connection with a shorthold tenancy where the tenancy was in effect on or after 6th April 2012.
(2) Those amendments do not apply in respect of a tenancy deposit received by a landlord in connection with a shorthold tenancy where—
(a) the tenancy was in effect on or after 6th April 2012, and
(b) the landlord has, before the end of the period of 30 days beginning with that date—
(i) complied with the initial requirements of an authorised scheme in relation to the deposit, and
(ii) given to the tenant and any relevant person the information prescribed for the purposes of section 213(5) of the Housing Act 2004.
(3) Words and phrases used in this article have the same meaning as in Chapter 4 of Part 6 of that Act.