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Deposits held under Assured Shorthold Tenancies
If a Landlord wants to serve a Section 21 Notice to get possession of their property and they have taken a deposit they need to comply with the Housing Act 2004.
- Put the deposit in an authorised scheme and serve the Prescribed Information
This requires the deposit to be put into an authorised scheme (either by a payment into the scheme or obtaining insurance under an insured scheme) within 30 days after receiving the deposit and then to serve the Prescribed Information within the same time.
- Serve the Prescribed Information
The Prescribed Information is a complicated document and you need to read it carefully.
The DPS print some – but not all – of the prescribed information on the reverse of the form which gives landlords and agents their unique reference number.
You need to identify for the Tenant the tenancy terms which deal with the circumstances in which the deposit can be retained by the Landlord or in whole or in part. The relevant terms in many standard Assured Shorthold Tenancy agreements are not all in one place.
The Tenant needs to be allowed an opportunity to acknowledge receipt of the prescribed information.
- Failure to (a) place the deposit with an authorised scheme or (b) to serve the Prescribed Information
What happens if a deposit is not placed with an authorised scheme or the Prescribed Information is not served? The Section 21 Notice is invalid.
- Sanctions for failing to (a) place the deposit with an authorised scheme or (b) to serve the Prescribed Information
A Tenant or a former Tenant can ask the court to repay the deposit to the Tenant or former Tenant or put it in an authorised scheme. Worse the court must also require the Landlord to pay the tenant or former tenant a sum equal to an amount between one and three times the deposit. Both of these payments have to be made within 14 days of the court order.
- Returning the deposit
A valid Section 21 Notice can always be served when the deposit has been returned to the Tenant in full or with such deductions as agreed between the Landlord and Tenant. So if you want to be really safe then you can simply return the deposit and then serve a Section 21 Notice. (NB This will not stop the tenant or former tenant being able to make the application for payment of up to 3 times the deposit being made to them.)