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Deposit Disputes

Assured Shorthold Tenancies:

Where a tenant pays a deposit under an assured shorthold tenancy, a landlord must protect it in a government approved scheme. The landlord has 30 days to register the deposit with a scheme and provide the tenant with the schemes prescribed information.

If the landlord fails to meet the 30-day deadline a tenant could make a claim for:

– The return of the deposit or its protection in a scheme; and

– A penalty payable by the landlord of up to 3 times the amount of the deposit.

Landlords could also face immense difficulties in evicting a tenant where they have failed to register a deposit and provide the prescribed information because in such a situation Section 21 notices are invalid.

At the end of the tenancy if the landlord wishes to make deductions from the deposit, the landlord will need to make use of the relevant schemes adjudication process. All the schemes have detailed explanatory notes on how the adjudications process works. For any other dispute or issue regarding the deposit, our team can offer specialist advise to both landlords and tenants.

Common/Corporate Law Tenancies:

A common law tenancy is one that falls outside the Housing Act 1988, which governs assured shorthold tenancies. Common law tenancies are controlled by general case law and some limited legislation.

Common law tenancies will usually occur where:

– The tenant is a limited company; or

– The rent exceeds £100,000 p.a.

Although there are other cases where they can occur.

Deposits taken in connection with these tenancies do not have to be registered in a government approved scheme. For this reason, it is essential that the tenancy agreement includes clauses that specify how the deposit will be held and how the deposit will be dealt with at the end of the tenancy, including the procedure for its return.

Deposit disagreements account for a large percentage of the landlord-tenant disputes that end up in the courts. If you are a tenant filing such a case or a landlord defending one, our team can offer specialist advise on how to proceed and assist with any litigation or alternative dispute options that the tenancy may allow for.

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