A top lawyer has criticised the law on tenancy deposit schemes as flawed and believes tenants should be able to take responsibility for paying their own deposits into the scheme.
Currently, only landlords or agents can pay deposits into the schemes.
John Stephenson, senior partner and head of residential property team at London city firm Bircham Dyson Bell, spoke out after a Court of Appeal ruling in the case of Tiensia v Vision Enterprises.
In the case – reported on by EAT – the court ruled that landlords need not be penalised for breaching the Housing Act requirements on tenancy deposit protection provided they had lodged the deposits and given the tenants the prescribed information by the time any case is brought.
The Housing Act had stipulated that deposits are lodged and the information given to the tenant within 14 days.
But Stephenson said: “The case has called into question the ability of the TDS to protect deposits as the landlord was able to retrospectively pay it into a scheme without any recourse for late payment prior to appearing in court, and forcing the tenant to incur the cost of bringing the action in the first place.
“On this occasion, I have to say that the judgement has seriously weakened the usefulness of the TDS. In most cases it would cost the tenant many more thousands of pounds to bring an action against a landlord, than the amount of the actual deposit itself.
“A tenant’s reassurance that the landlord will invest the deposit has been weakened and he/she can’t be certain their deposit is safe unless they bring an action to make certain that it is – and the cost of doing that is prohibitive in most cases: the loss is greater than the gain.
“Tenants shouldn’t have to get as far as court to force the landlord’s hand – this is not the best use of the law.”
Landlord bodies welcomed the Court of Appeal ruling, as they said it stopped landlords being penalised if they had merely overlooked their administration by mistake, but they nevertheless advise that landlords and agents still lodge the deposits and supply the information within 14 days.