Since 6 April 2007 any landlord who receives a deposit in relation to an Assured Shorthold Tenancy (AST) must "protect" that deposit under one of the three tenancy deposit schemes. The landlord must also give the tenant certain prescribed information within 14 days of receiving the deposit. This includes: details of the tenancy deposit scheme chosen by the landlord to protect the deposit; the procedures for repayment of the deposit at the end of the term; the amount of the deposit paid and the circumstances in which this may be retained by the landlord at the end of the tenancy.

If the landlord does not comply, a number of sanctions may be imposed. The landlord may be unable to secure possession of the property. In addition, the landlord may be ordered to repay the deposit to the tenant, along with a fine of three times the amount of the deposit.

In Harvey v Bamforth, the landlord granted an AST to the tenant on 19 June 2007. A deposit was taken. The deposit was protected in a scheme within 14 days, as required by the legislation. However, the landlord omitted to give the tenant the prescribed information. The landlord subsequently provided the information on 22 February 2008. The tenant claimed that it was entitled to repayment of its deposit, along with the statutory fine, because the landlord had not provided the information within 14 days.

A deputy district judge initially granted the tenant's application. The landlord appealed to Sheffield County Court.

Section 214 of the Housing Act 2004 provides that the sanction of ordering the landlord to repay the deposit and to pay the fine applies where:

  • the initial requirements of the deposit scheme have not been complied with; or
  • the prescribed information has not been provided; or
  • the tenant has been notified by the landlord that a particular scheme applies to the deposit, but has been unable to obtain confirmation from the scheme administrator that the deposit is being held in accordance with the scheme.

The court held that the sanction did not apply where the prescribed information had in fact been provided, even though this had been done outside of the 14 days laid down in the legislation. It left open the question of whether a landlord who provided the prescribed information only after the tenant had issued proceedings claiming the return of his deposit under section 214 would be liable to a sanction. It also ignored the technical point that the provision of the prescribed information to the tenant within 14 days was a condition of the deposit scheme, with the result that the initial requirements of the scheme had not been complied with.

Things to consider

The tenancy deposit rules affect those buying and selling properties subject to ASTs (e.g. a parade of shops with flats above), as well as those granting new ASTs. The sanction which will be of most concern to the majority of property owners and developers is that the landlord is unable to serve a notice under section 21 of the Housing Act 1988 to recover possession of the property unless the tenancy deposit legislation has been complied with.

Although this decision is helpful to those who, through an oversight, omit to tell their tenants how their deposits have been protected, uncertainties over the operation of the legislation remain following this decision. In particular, it is unclear whether the right to serve a section 21 notice is merely suspended, so that once the deposit has been protected and the requisite information has been given to the tenant the right will revive.

In this case the landlord was prevented from recovering possession until it had provided the tenant with the prescribed information. It appears, following this decision, that this breach is remediable. However, the landlord had protected the deposit within 14 days of its receipt – it had just omitted to tell the tenant that. The position for landlords who fail to protect deposits within 14 days, but who protect them before attempting to recover possession, has not yet been tested. For this reason, it is crucial that on the transfer of any property subject to an AST, as well as on the granting of a new AST, compliance with the tenancy deposit legislation is ascertained.