Tenant Deposit Protection: Court Ruling Update

A judge has ruled tenants can claim multiple amounts of compensation from landlords who fail to protect their security deposits.

Sitting at Central London County Court, Judge Johns decided that tenants could make more than one compensation claim when a landlord failed to protect their deposit on moving into a privately rented home - and again when the let flipped from a fixed term into a statutory periodic tenancy.

The judge heard an appeal from renters Sandor Szorad and Eszter Kozma against landlord Pritpal Kohli, owner of a Dalston, East London flat.

The court was told the renters moved in for a 12-month fixed term from July 2019, paying a deposit of £1,326.92. The deposit was not protected at the start of the tenancy nor when the fixed term ended, and the agreement changed into a statutory periodic tenancy. The deposit was not returned when the renters left the flat.

At the previous hearing, the judge awarded one amount of compensation, stating that he considered the law only allowed them to claim that much.

Court decision was reversed on appeal.

But he awarded the renters the maximum allowed at law - three times the deposit, which was £3,980.76.

Judge Johns reversed the decision on the grounds the landlord had failed twice to protect the deposit on the creation and renewal of the tenancy.

Kohli did not attend the hearing and was not represented.

The judge found in favour of Szorad and Kozma and increased the total compensation amount to almost £10,000, including the initial deposit.

The decision leaves landlords in no doubt that the penalties for failing to protect the deposit become payable each time the tenancy resets.

Read the full judgment Szorad & Anor v Kohli [2023] EW Misc 12 (CC)

What the law says about deposit protection

Since 2007, the law has demanded that an authorised scheme protect security deposits.

Landlords must place the deposit in a scheme within 30 days of receiving the money. The landlord should also give the tenant a list of prescribed information within 30 days:

• the address of the rented property
• how much deposit they’ve paid
• how the deposit is protected
• the name and contact details of the tenancy deposit protection scheme and its dispute resolution service
• The landlord’s name and contact details
• the name and contact details of any third party who paid the deposit
• why some or all of the deposit would be kept - for example, because your tenants damaged the property and you need to fix it
• how to apply to get the deposit back at the end of the tenancy
• what to do if they cannot get hold of you at the end of the tenancy
• what to do if there’s a dispute over the amount of the deposit returned at the end of the tenancy

If a deposit is not protected, a court can also order the Section 21 no-fault eviction path to be closed to a landlord wishing to possess the property unless the deposit is fully returned before serving notice.

More about deposit protection for landlords