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The Localism Act 2011 – Tenancy Deposit Schemes
Prior to the introduction of the Localism Act 2011, which came into force on 6th April 2012, a landlord was required to follow a prescribed route for the protection of a deposit under an assured shorthold tenancy agreement within 14 days of receipt, providing prescribed information to the tenant about the scheme within this deadline. Failure to properly protect the deposit and provide the necessary information would mean that a landlord would be unable to regain possession of the property using the ‘Section 21 Notice’ procedure under the Housing Act 1988, in addition to the imposition of other associated sanctions and penalties.
Since April 2012 a number of changes have been made to the procedures, including:
- An increase in the period for compliance from 14 to 30 days
- The application of the penalty against a landlord for failure to comply by this deadline, rather than by the hearing date as previously
- The right for a tenant to apply to the court where a landlord has failed to comply, even when the tenancy has ended
- A change in the level of the penalty to be between one and three times the deposit sum, at the court’s discretion, in addition to the return of the deposit
- The removal of the restriction on service of a section 21 notice in certain circumstances
The changes will have a retrospective effect, applying to all tenancies already in existence on 6th April 2012, in that landlords would have 30 days from this date to comply with the statutory requirements if they had not already done so, subject to certain conditions. An enquiry of a Vendor will need to be made to ascertain that the money was placed on Deposit within the required time scale.