Tenancy deposit error prevents landlord repossessing property

A landlord has been prevented from serving a possession notice because the tenant’s deposit had not been placed in an authorised protection scheme.

This was in spite of the fact that that the deposit had been paid before the Tenancy Deposit Scheme (TDS) regulations came into force.

The case involved a tenant who had started a tenancy in 2002 and paid a deposit. The tenancy was renewed in 2005. This was after the TDS regulations were introduced. However, the landlord didn’t place the deposit in an authorised scheme as it had been paid at the start of the original tenancy.

In 2012, the landlord served a possession notice. The tenant claimed the notice was invalid because the deposit had not been protected in a scheme. The court, however, ruled in favour of the landlord because the deposit had been paid before the regulations applied.

The Court of Appeal has now overturned that ruling. It held that the wording of the regulations was clearly targeted at cases where the deposit was not being held in an authorised scheme, regardless of when the deposit had originally been paid.

This should not have caused any problem for the landlord. He could have cleared the way to seek possession in two ways: he could have placed the deposit in an approved scheme or he could have repaid it to the tenant. He did neither so the possession notice was invalid.

Please contact Sarah Gratton in our Warminster office on 01985 214444 or email sgratton@mulaw.co.uk  if you would like more information about the issues raised in this article or any aspect of commercial property law.