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Landlord flouting the spirit of the tenancy deposit legislation says Judge

Note - the Landlord Law Blog has now moved to www.landlordlawblog.co.uk.

There is new tenancy deposit case report in the November issue the Legal Action Magazine, Da Costa v. Pinter, which took place at Bromely County Court in April 2009.

Here the tenancy agreement provided for a monthly rent of £1,950 but also stated 'Payment required in advance of £4,200'. The agents invoice described £2,250 of this sum as a deposit, and at the end of the tenancy the tenants asked for it back. As it was not forthcoming they issued county court proceedings for its return and also claimed the fine of three times the deposit sum. The deposit was then protected, after the issue of proceedings.

The Judge (District Judge Burn) accepted that the sum paid was a deposit and awarded the claimants the deposit money and the fine of £6,750. However the interesting part of this case is the quote from the Judge:

"The purpose of the Act is to try to ensure that landlords secure tenancy deposits in a recognised deposit scheme at the start of the tenancy, so that the deposit can be returned to tenants quickly when the tenancy ends, and that disputes about the deposit can be resolved under the schemes' procedures without the need for court proceedings.

Landlords who describe a deposit as something else, who do not secure it promptly in a deposit scheme as required by the Act, then fail to return the deposit when the tenant leaves (especially if this is without good cause, thereby forcing the tenant to start court proceedings to recover the money) but who then at the last minute after the tenant issues proceedings, pay the deposit into a scheme, are clearly flouting the spirit of the legislation and, on my interpretation, the letter also.

If the s213 and s214 remedies are not applied in a case such as the instant one, the Act would be rendered virtually toothless when landlords flout its provisions."

There have been suggestions, following on from the Sheffield Case (Harvey v. Bamforth), that a landlord is 'safe' so long as he protects the deposit before any court hearing. However I suspect that if and when a case ever gets to the Court of Appeal, the approach that they will take is more likley to be the same as that taken by District Judge Burn in this case.

Full post as published by The Landlord Law Blog on November 07, 2009 (boomark / email).