The Tenancy Deposit Scheme: Unscrupulous Landlord`s rejoice!

In previous articles ("Tenancy Deposit Scheme: Court of Appeal clarification upon the deadline for protecting a tenant`s deposit" and "The Tenancy Deposit Scheme: 3 years young") we looked at the statutory requirements of the Tenancy Deposit Scheme and impact of Tiensia case.

In the recent case of Gladehurst Properties Limited v Hashemi [2011], the Court of Appeal dealt another blow to the Tenancy Deposit Scheme, ruling that that where an assured shorthold tenancy has come to an end, a Tenant cannot apply for an award of 3 times the amount of the deposit. 

In that case, at the beginning of the tenancy, the Tenant paid a deposit but, in breach of the provisions of the Act, the Landlord did not pay the money into a Tenancy Deposit Scheme. At the end of the tenancy term, the Tenant vacated the property. Following an inspection of the property, the Landlord returned to the Tenant the majority of the deposit paid having first deducted a sum of money on account of the condition in which the property had been left by the Tenant and due to some items belonging to the Landlord being missing.

Some time after the tenant had vacated the property, the Tenant issued proceedings for 3 times the value of the deposit. The dispute came before the Court of Appeal after the Landlord appealed a decision which gave judgment in the Tenant`s favour for 3 times the value of the deposit and ordered that the deposit be returned to the Tenant.

The Court of Appeal unanimously overturned that decision, stating that where a tenancy has come to an end, the Landlord and Tenant relationship no longer existed between the parties. If the Tenant wishes to pursue an order for 3 times the value of the deposit and the return of the deposit, the Tenant must take steps to obtain such an order during the term of the tenancy 

Only time will tell whether the decisions in Tiensia and Gladehurst have dealt a fatal blow to the Tenancy Deposit Scheme in its fight to stop unscrupulous Landlords from retaining deposits, utilising the money as if it were their own and leaving tenants without any remedy. 

If you have any queries relating to issues covered by this article or any property related dispute, please contact Ralph Gilbert, partner and Head of the Property Dispute Resolution Group on 01482 323239 or ralph.gilbert@rollits.com

Posted on: 10/10/2011

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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