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From 6 April 2012, a new procedure is to be followed for serving a section 21 notice if a deposit has been received but not protected within 30 days. In addition, prescribed information must be considered before serving a section 21 notice.
Prescribed information is relatively straightforward if a deposit has been protected perfectly fine, but the prescribed information has not been given, or not all the information has been provided.
In this case, the information may be given at any time, even after the 30 days, and the section 21 notice may be served after—[section 215(2) Housing Act 2004].
If a tenant makes a claim, the landlord will have to pay compensation if 30 days have been missed, and there is no defence to this. The amount payable will be between the deposit amount and up to three times the deposit [section 214(4) Housing Act 2004].
You can obtain prescribed information from each scheme, and often the scheme rules and a leaflet must also be attached. The information required is extensive. Alternatively, you could create a tenancy in our Tenancy Builder and extract the deposit prescribed information pages, but you would need some knowledge of extracting pages from a PDF.
For the contents of the prescribed information, see the deposit handbook page and this page for even more detail.
The tenant(s) must be offered “an opportunity to sign” the prescribed information, and the landlord or their agent must sign it. You should include a second copy of deposit prescribed information and ask both documents to be signed and one copy returned to you.
If there is a “relevant person” (person who paid the deposit on behalf of the tenant), send a further copy to them asking them to sign.
After allowing four days for delivery, section 21 can be served.
Where the deposit either hasn’t been protected at all or wasn’t protected within 30 days, then no section 21 notice may be served until:
(a) the deposit has been returned to the tenant in full or with such deductions as are agreed between the landlord and tenant, or
(b) an application to a county court has been made under section 214(1) and has been determined by the court, withdrawn or settled by agreement between the parties.
In reverse, (b) above deals with the situation where the court has already ordered payment of the penalty to the tenant in respect of a failure to protect the deposit. Therefore, if the landlord has had the penalty imposed, they may then serve a section 21 notice without doing anything further.
The part that is of main interest is (a) above. Suppose a deposit has not been protected within 30 days. In that case, the landlord must either repay the deposit in full to the tenant or agree on deductions with the tenant, for example, by offsetting the deposit from unpaid rent. The agreement will be strict, so a landlord to say it was verbally agreed will not be sufficient.
We have prepared a helpful form to obtain an agreement for deductions from the tenant. Please note that despite the ability to serve a section 21 notice after the procedure below is followed, a penalty of between the amount of the deposit and three times the deposit will be payable as compensation by the landlord to the tenant if the tenant applies.