Tenancy Deposits and Prescribed Requirements

The Housing Act 2004 requires a deposit that has been taken in connection with an Assured Shorthold Tenancy (‘AST’) to be protected in an authorised deposit scheme within 30 days from receipt by the landlord. The landlord must also serve the Prescribed Information on the tenant and anyone who has paid the deposit on the tenant’s behalf within 30 days of receipt. Failure to do so, can result in the courts imposing financial deposit penalties, as well as preventing the landlord from serving a section 21 notice (the “no fault” eviction notice).

The first hurdle of protecting the deposit within 30 days is usually easily understood by landlords but where we typically see issues is the Prescribed Information. The Prescribed Information needs to be provided to the tenant and/or anyone who has paid the deposit. This can be found in the “The Housing (Tenancy Deposits) (Prescribed Information) Order 2007”. The order provides a list of things which form part of the prescribed information they are:

1. 1. The name and contact details of the scheme in which the deposit is held;
   2. The deposit leaflet ( if the deposit scheme has one);
   3. The procedures under the deposit scheme by which the deposit may be repaid at the end of the tenancy;
   4. The procedures under the deposit scheme that apply if either party is not contactable at the end of the tenancy;
   5. The procedures that apply under the deposit scheme where there is a dispute between the parties about the repayment;
   6. Dispute resolution facilities available under the deposit scheme;
   7. The amount of the deposit;
   8. The contact details for the landlord, tenant and anyone else who may have paid the deposit;
   9. The circumstances when all or part of the deposit may be retained; and
   10. A certificate signed by the landlord that the information provided is accurate to the best of his knowledge and belief and that the tenant was given an opportunity to sign the document

The deposit schemes provide templates which makes it easy for landlords or their agents to complete the information. . However, what happens when some of the information is incorrect or not completed? Does this mean that the prescribed information is defective. This issue was considered by the High Court on appeal in the case of Lowe v The Governors of Sutton’s Hospital In Charterhouse [2024] EWHC 646 (CH).

In this case, the tenant had brought a deposit penalty claim against the landlord for multiple deposit penalties on the basis that the landlord had failed to comply with the prescribed requirements under section 213 of the Housing Act 2004. He claimed that the prescribed information was defective because it was not signed by the landlord, and contained reference to an incorrect tenancy clause.  The case also contained  other grounds of appeal relating to limitation which are not covered as part of this blog.

Errors in the Prescribed Information

The High Court (“HC”) had to decide whether the error in the prescribed information would invalidate the prescribed information. The HC considered whether a reasonable recipient of the information reading it in context would have understood that there was an error referencing the tenancy clause of a different agreement. It was satisfied that they would have understood this. The HC also considered whether a reasonable recipient would have understood that the corresponding term could be found in the tenancy agreement and again they were satisfied. Therefore, the HC was of the view that the statutory purpose of deposit prescribed information was fulfilled and that this was sufficient – and as such dismissed this ground of appeal.

Unsigned Prescribed Information

The Prescribed Information certification was not signed by the landlord, but the landlord had provided a cover letter accompanying the Prescribed Information that was signed. The HC concluded that the signed covering letter provided with the Prescribed Information was sufficient to fulfil the statutory purpose.

The HC decision was welcomed by landlord’s and letting agents in the industry as it finally clarified some of the uncertainty regarding prescribed information. It also clarified that referencing incorrect tenancy clauses or not providing the signed prescribed information may not be fatal to the claim.

However, this is not the end of the case.

Appeal

Mr Lowe has now appealed the decision to the Court of Appeal. He has obtained permission for a second appeal. The Court of Appeal will consider the issue on the above two grounds again. It will decide whether a failure to sign the prescribed information can be rectified and if referencing incorrect tenancy agreement clauses fulfil the Prescribed Information requirements.

The outcome of this decision will be important for landlords and agents in the industry as minor errors in the deposit prescribed information are very common.

For the time being, landlords and agents are advised to carefully complete their Prescribed Information Documentation to avoid such pitfalls.