Landlord liable to pay three times deposit to ex-tenant
In a recent case, a Landlord was ordered to pay three times his tenant's deposit for failing to properly comply with legal landlord requirements.
He was found to be in breach of the requirement to provide the tenant with prescribed information under the Tenancy Deposit Scheme ("TDS") and was obliged to pay the tenant three times the deposit. The Court held it did not matter that the deposit had already been repaid to the tenant, nor that the Landlord was unaware of its obligation to provide prescribed information. [Swrpere v Nice 20.11. All England Law Reports (d) 36].
This case was perhaps surprising because the Landlord had already given the tenant the deposit back; the breach of the regulations was his failure to provide the prescribed information to the tenant at the beginning of the tenancy when the deposit was taken.
The case emphasises that the obligation is on the Landlord to personally provide this information and he therefore needs to be able to prove that he has done so.
This case illustrates the technical difficulties a buy-to-let landlord can get into in not obtaining proper legal advice with regard to the creation of a tenancy. Many letting agents are good at finding tenants for Landlords but they are not good at dealing with compliance.
Pinney Talfourd recommend that, when entering into a tenancy agreement, all Landlords obtain independent legal advice on the associated documentation; our experience is that this can save money in the long run as sorting out problems after they have arisen can be very expensive and the case of Swrpere v Nice shows that the Landlord will be penalised, even where the tenant cannot prove any loss.
Many deposits are 1.5 months' rent, so the penalty is therefore potentially 4.5 months' rent - easily enough to completely wipe out any landlord's return on a property.
For advice on compliance with the TDS and the creation of assured shorthold tenancies, contact Kerry Hull or Stephen Eccles.
