Maximum penalty imposed for landlord's failure to provide the prescribed information as required under the tenancy deposit schemes

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Tenancy deposit schemes were created under the Housing Act 2004 ("the 2004 Act") and subsequently amended by the Localism Act 2011 ("the 2011 Act").

In brief, under the 2004 Act, landlords are required to protect deposits received in connection with assured shorthold tenancies and to provide the tenant with the information prescribed by the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 ("the Order") within 30 days of receipt of the deposit.

Prescribed information under the Order includes:

  • The contact details of the scheme administrator of the authorised tenancy deposit scheme applying to the deposit (paragraph 2(1)(a));
  • Information explaining the operation of the legislative provisions relating to tenancy deposit schemes (paragraph 2(1)(b));
  • The procedures which apply in relation to the repayment of the deposit at the end of the tenancy (paragraph 2(1)(c));
  • The procedures which apply where the landlord or the tenant are not contactable at the end of the tenancy (paragraph 2(1)(d));
  • The procedures which apply where the amount of the deposit repayable is disputed (paragraph 2(1)(e));
  • The facilities available under the scheme for enabling a dispute to be dealt with without litigation (paragraph 2(1)(f));
  • Other information in relation to the tenancy and the deposit, including the address of the relevant property, the contact details of the landlord, tenant and any other relevant person, the circumstances under which all or part of the deposit could be retained and confirmation by the landlord that the information provided is accurate to the best of their knowledge or belief (paragraph 2(1)(g)).

Ayannuga v Swindells [2012] EWCA Civ 1789

The recent Court of Appeal ruling of Ayannuga v Swindells [2012] EWCA Civ 1789 underlines the importance of providing tenants with the prescribed information under the Order and the consequences of a landlord's failure to do so. (Please note that the case was based on the law applicable prior to the amendments introduced by the 2011 Act.)

Facts

The case arose out of a dispute between a landlord and a tenant where the landlord sought possession based upon rent arrears. The tenant counter-claimed that the landlord had not provided her with all the prescribed information as required under the 2004 Act and the Order.

The landlord accepted this but argued that the requirement to provide the prescribed information is largely procedural and that the relevant information was freely available to the tenant from the scheme administrator's website. In addition, he argued that the aim of the legislation was to protect the tenant's deposit which had been done.

The trial judge agreed with the landlord and dismissed the tenant's claim on 15 March 2012. The tenant appealed.

Court of Appeal judgment

Handing down the leading judgment in the Court of Appeal on 6 November 2012, Lord Justice Etherton disagreed with the trial judge and allowed the appeal holding that:

  • The landlord had failed to provide the tenant with all the prescribed information as required under the Order. In particular, the landlord had failed to provide information relating to the scheme's procedures for return of the deposit as specified by paragraphs 2(1)(c) and (d) of the Order;
  • It was no defence for the landlord to argue that the information could be obtained by the appellant making her own enquiries to the scheme's administrator. The information had to be provided directly by the landlord as required under section 213(5) of the 2004 Act, even if the tenant was aware of it;
  • The matters specified within the Order were more than matters of procedure and were of significant importance to the tenant. The obligation of the landlord to provide the prescribed information was regarded as of equal importance to their duty to safeguard the tenant's deposit. This purpose is specified in section 212(2) of the 2004 Act as "safeguarding tenancy deposits paid in connection with shorthold tenancies and facilitating the resolution of disputes arising in connection with such deposits".

The Court of Appeal therefore required the landlord to pay the deposit of £950 back to the tenant and to pay an additional penalty of three times the deposit, amounting to £2,850.

Notably, what was in fact a minor omission by the landlord, which could have potentially been avoided if the landlord had included a copy of the deposit scheme's information leaflet, have cost him dearly.

Please note that had the case been decided under the amended legislation following the 2011 Act, the penalty would have been up to three times the deposit, but could have been less.

Implications

This judgment provides a timely reminder to private landlords of the importance of supplying the tenant with the information prescribed by the Order, in addition to safeguarding the deposit.

Such information must be provided within 30 days of receiving the deposit.