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In the matter of R (Tummond) v Reading County Court , the High Court held non-compliance sanctions would only be imposed if the deposit was not protected within 30 days.
Since 6th September 2007 landlords can face severe sanctions for failing to protect the deposit paid by a residential tenant under a 'Tenancy Deposit Scheme' within 30 days of receipt. Penalties include ordering landlords to pay three times the deposit to the tenant.
If landlords fail to secure the deposit, one of the other sanctions for non-compliance is that the courts will not grant a section 21 order under the Housing Act 1988 and will deem a s.21 notice invalid, rendering it impossible for the landlord to secure possession of his property.
However, notwithstanding the clarity provided by the High Court, it is a complex area. Whether the courts will consider applying sanctions to landlords who fail to secure a deposit, for instance, out of ignorance (although ignorance of the law is no defence), or secure it late due to the management agent's failure, remain to be seen.
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