Defend A Deposit Claim

Landlords must protect any deposit received from tenants in a Government-approved deposit protection scheme within 30 days of receiving it. Landlords must also keep evidence of providing the deposit certificate and prescribed information to tenants if they collect a deposit.

There are legal consequences if you fail to protect a tenant’s deposit, the first being that you won’t be able to serve a section 21 notice. The second is that the tenant may claim compensation at 1-3 times the value of the tenancy deposit.

If you are a landlord looking to defend a tenancy deposit claim, our network of specialist landlord lawyers is on hand to provide guidance and representation should you need it. Contact our legal assessment team for a free case assessment and to get a fixed-fee quote for your needs. 

• How to defend a deposit claim

• What are the potential outcomes of a tenant deposit claim?

• Is it a legal requirement to protect a tenant's deposit?

• Whose responsibility is it to protect a tenant's deposit?

• What to do if you don't protect your tenant's deposit

How to defend a deposit claim 

If you’ve received a letter of claim from a tenant regarding an unprotected deposit, you should seek legal advice from a specialist landlord and tenant lawyer. They will 

1. Review the letter of claim

2. Determine whether the tenant’s claim is valid. 

If the claim is invalid, your solicitor can draft a letter of response outlining why. If the tenant’s claim holds some weight, your solicitor can support you in negotiating a settlement, like refunding the deposit, making a counterclaim, or taking further action to address the issue. 

What are the potential outcomes of a tenant deposit claim? 

Under Section 214(4) of the Housing Act 2004, the court can order a landlord to pay a tenant a sum equal to or up to three times the deposit. 

Alternatively, landlords and tenants can also opt to try and resolve disputes outside of court through alternative dispute resolution (ADR), the most popular method being through the Tenancy Deposit Scheme (TDS).

ADR is often favoured over going to court because it tends to be more cost-effective and can lead to quicker resolutions. The TDS, in particular, is an independent scheme, and its decisions hold weight. However, it's important to note that TDS is typically only suitable for resolving disputes when a tenancy ends.

Is it a legal requirement to protect a deposit? 

Landlords are legally required to protect any deposit received from tenants in a government-approved scheme. This must be done within 30 days of receiving the deposit. 

Landlords must also return the deposit to tenants within 10 days of both parties agreeing on the final amount at the end of the tenancy. 

Whose responsibility is it to protect a tenant’s deposit?

The responsibility to protect a tenant's deposit ultimately falls on the landlord. It is a statutory obligation outlined in deposit regulations, and landlords cannot contract out of statutory obligations.

This means that landlords can't shift the responsibility onto their agents if a deposit is not protected.

However, suppose the landlord has a clause in the agency agreement instructing the agent to fulfill these duties on their behalf, and the agent fails to do so. In that case, the landlord may have grounds for a separate legal action against the agent for breach of contract.

What to do if you don’t protect your tenant’s deposit? 

If you’ve missed the 30-day window to protect your tenant’s deposit, they can file a claim in county court at any point during their tenancy. 

If the court says that you haven’t protected the deposit, you will have to either repay the deposit to your tenants or put it into a custodial tenant’s deposit protection scheme within 14 days. 

How can Lawhive help?

Our network of landlord solicitors is on hand to help guide you through defending a deposit claim. 

To get started, contact us today for a free case assessment.