Landlords will be fined if information is not given to tenants for residential deposits.
Ayannuga v Swindells [6 November 2012] concerned the important issue of a landlord’s statutory obligations to provide certain information to tenants under an assured shorthold tenancy in relation to deposits provided by the tenant. Landlords must take care to ensure they comply with their obligations.
The tenancy deposit scheme is a creation of the Housing Act 2004 and safeguards tenancy deposits paid in connection with assured shorthold tenancies and facilitates the resolution of disputes arising in connection with such deposits. The Act requires a landlord, who has received such a deposit, to deal with it in accordance with an authorised scheme and give the tenant prescribed information relating to the scheme. Such information at the time had to be given within 14 days of the date the landlord received the deposit. The issue in this case was whether the landlord, Swindells, complied with the obligation to provide the information substantially as prescribed by the legislation.
Swindells let a property to Ayannuga on an assured shorthold tenancy for 12 months at a monthly rent of £950. The tenancy agreement required Ayannuga to pay a deposit of £950 and the deposit was duly paid to the administrator of an authorised custodial scheme. Subsequently, Swindells sought possession of the property based on rent arrears. The proceedings were defended and Ayannuga counterclaimed for an order for repayment of the deposit and also payment of a sum equal to three times the amount of the deposit. This was a statutory “penalty” for landlords who did not comply with certain statutory requirements in relation to the deposit. Ayannuga alleged breaches of those requirements including a failure to provide certain information.
Swindells denied that there had been any breach, arguing that the information had been provided in the tenancy agreement and in a letter to Ayannuga. The matter came before the county court and just before the judge gave his judgment, Swindells provided to Ayannuga a handwritten document giving additional information about the deposit.
The judge considered that since Swindells satisfied the requirement to provide the information (through the information in the lease and that provided just before he delivered his judgment), the law compelled him to find that Swindells was not in breach of the legislation. Since the information was given in a form substantially to the same effect as that prescribed by the legislation, the judge considered that Swindells had complied with his obligations.
Ayannuga appealed and the Court of Appeal allowed the appeal. Swindells had failed to comply with the legislation. The information provided by Swindells was inappropriate to the custodial scheme under which the deposit was held. What was required to be provided but was not provided, was information relating to the scheme’s procedures for the deposit’s return to the tenant in the circumstances specified in the legislation. The legislation required the landlord to provide the information and that was not done. They were not mere matters of procedure, but were of real importance to the tenant, defining the circumstances in which the tenant can recover the deposit and the means by which disputes can be resolved, including resolution without recourse to litigation.
The entire omission of certain required information meant Swindells had failed substantially to comply with the statutory requirements. The provision of that information was part of the statutory purpose of setting up tenancy deposit schemes in the first place, and was, therefore, part of the substance of the requirement. The Court ordered Swindells to repay the deposit plus pay Ayannuga a “penalty” of three times the amount of the deposit, as provided for in the legislation.
It should be noted that this case related to tenancy deposit schemes as they were prior to changes introduced by section 184 of the Localism Act 2011 as from 6 April 2012. One of the changes is that the “penalty” may be less than three times the amount of the deposit (but not less than the deposit itself).