Where a tenant pays to a landlord a tenancy deposit the landlord is legally required to protect that deposit in an authorised scheme and the landlord is required to comply with what are called ‘initial requirements’ (Section 213 of the Housing Act 2004).
Where a landlord fails to protect the deposit and/or fails to comply with any aspect of the ‘initial requirements’ there are sanctions, one of which being that the landlord cannot utilise the Section 21 (no fault eviction) procedure until the deposit is protected and the initial requirements are complied with (Section 215 of the Housing Act 2004).
Another sanction is that – where a tenant brings a claim against the landlord for failure to deal with the deposit in accordance with the law (and proves their claim) – a Court MUST award the tenant a sum up to 3 x the initial deposit (Section 214(4) of the Housing Act 2004). Where the tenant has had multiple tenancy agreements in relation to the property (and Section 213 of the Housing Act 2004) has not been complied with) then the landlord is likely to find themself liable for multiple sanctions.
There is, however, a limiting factor: something called ‘limitation’.
The Limitation Act 1980 sets out periods of time whereby a claim becomes ‘statute barred’ – i.e. the Defendant can defend the claim on the basis that too much time has passed. In a claim relating to Section 213 of the Housing Act 2004, the relevant limitation period is 6 years but it also begs the question of when does the 6 years begin to run. This question was answered by the High Court in the appeal case of Lowe v The Governor’s of Sutton’s Hospital in Charterhouse [2024] EWHC 646 (Ch).
The appeal confirms the first instance decision that the limitation period begins to run 30 days after the deposit has been handed over to the Landlord (see paras [48]-[49] of the first instance decision of HHJ Luba KC).
The rationale is straightforward: the law provides the landlord with 30 days in which to protect the deposit, thus a failure to comply with the initial requirements within that period means that the landlord is in breach and thus the cause of action (the trigger for a claim) arises.
If, therefore, the Landlord fails to protect the deposit within that period (within 30 days of receiving the deposit) then the tenant has a claim against the landlord but (because of the Limitation Act 1980) they must bring that claim within 6 years otherwise the landlord will have a defence to the claim by simply asserting that the tenant has waited too long before bringing the claim.