The Housing Act 1988 (HA 1988) S.21 sets out the circumstances upon which a landlord can end an Assured Shorthold Tenancy (AST) without providing a reason for possession. Pursuant to S.21 the Court shall make an order for possession if the fixed term period of the AST has come to an end, and no further AST is for the time being in existence, and the landlord has given the tenant not less than 2 months’ notice. The Notice cannot be validly served unless the landlord has complied with certain legal requirements (S.21A HA 1988).

One important legal requirement is that, pursuant to S.213 of The Housing Act 2004, private landlords must within a 30-day period protect tenancy deposits in an authorised scheme and must serve prescribed information on the tenant. Failure to comply with these requirements means a landlord cannot serve a valid S.21 Notice.

So, what can be done if you have failed to protect the tenant’s deposit and/or failed to serve the prescribed information within 30 days of receipt. The most straightforward way to get around this requirement is to serve the prescribed information and return the tenant’s deposit in full, before issuing a S.21 Notice. The deposit is not returned until the tenant receives it. The difficulty with this solution arises where a tenant is unwilling to accept a deposit, often where they have sought legal advice.

If a deposit has been protected in a government authorised deposit scheme, but not within the 30 days of receipt, then the landlord can instruct the deposit protection scheme to return the deposit to the tenant. The deposit protection scheme will then contact the tenant and ask for their payment details in order to return the deposit, but what happens if the tenant refuses/fails to provide their payment details, and the deposit protection scheme cannot return the deposit? Can the landlord serve a valid S.21 Notice? This is something of a grey area and very much up to the interpretation of the Judge hearing the case.

We have experience of cases where the Judge has refused to accept that a landlord instructing the deposit protection scheme to return the deposit to the tenant, in circumstances where the tenant then refuses/fails to provide payment details to enable the deposit protection scheme to return the deposit, amounts to the landlord having taken ‘all reasonable steps to return the deposit’, and therefore the S.21 Notice was deemed invalid.

So how else can a landlord ‘return a deposit’?

We have experience of cases where landlords have tried to argue at Court that posting a cheque for the value of the deposit through the tenant’s letter box should be treated as having returned the deposit in full. In our experience, Judges have historically been unwilling to accept this as amounting to full return of the deposit.  However, there is now some positive news. In a recent case, albeit not a Court of Appeal case, Richworth Limited v Derek Billingham [2023EW Misc 8 (CC) the Court considered the issue of whether posting a cheque to the tenant, could amount to ‘returning the deposit’. In this case, the Judge that where the tenant had failed to return the cheque or indicate that they do not accept the cheque, and a reasonable amount of time has passed before the S.21 Notice was served, it amounted to the tenant’s implied agreement to accept the deposit. The landlord had effectively returned the deposit, even though the tenant had not cashed the cheque.

As we say, this case is not a Court of Appeal case, and the Judgment makes it very clear that it was decided very much on the circumstances of this individual case. However, on behalf of a recent client, using our extensive expertise and knowledge of case law and evidence, we have successfully pursued this argument and secured a possession order.

If you are landlord facing these particular issues, we can review your case and advise you on the best way forward. Our property litigation team are ready and willing to assist you in resolving these issues. Please do not hesitate to get in contact.

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