Serving a section 21 notice when the tenant’s deposit hasn’t been protected

Section 213 of the Housing Act 2004 requires landlords to protect their tenant’s deposit in an authorised Tenancy Deposit Scheme (“TDS”) within 30 days of receiving it. Failure to do so can cause great difficulties when the landlord wishes to terminate an assured shorthold tenancy and also lead to fines ranging from one to three times the amount of the deposit.

Section 21 of the Housing Act 1988 allows for a notice to be served upon a tenant when the landlord requires possession of the property. Unlike a section 8 notice which is served upon a tenant when he or she has breached the terms of the contract, section 21 notices can be served when the landlord wishes the tenant to vacate the property, either during a periodic tenancy or at the end of a tenancy.

However, section 215(1) of the Housing Act 2004 prevents landlords from serving a section 21 notice if they have not secured their tenant’s deposit in a TDS. The Act also prevents landlords from securing the deposit in a TDS at a later date in a bid to serve a valid section 21 notice.

One way of getting around this problem is to return the deposit to the tenant before issuing the section 21 notice, so that the landlord is no longer in possession of it. The Housing Acts however, do not define the meaning of ‘returning’ money, and this becomes tricky when the tenant refuses to accept the deposit.

In situations like this it is best to avoid methods of payment such as cheques which can be rejected by the tenants. In order to ensure the tenant is in receipt of cleared funds at the time of serving the section 21 notice, it may be prudent to return the sum in cash at the time of service, or use other instantaneous methods of payment such as a bank transfer.

Our team of solicitors at Aston Bond have experience in advising clients wishing to serve a section 21 notice in the absence of securing their tenant’s deposit in a secured TDS. If you require assistance with serving a section 21 notice, call us today on 01753 486 777.

Aston Bond are holding a Landlord and Tenant seminar in late September, if you wish to attend please send your details to ndarby@astonbond.co.uk and we’ll be in contact. 

Amarjit Atwal, Paralegal