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Landlord Punished With Maximum Penalty For Minor Omission

November 14, 2012 | Landlord News  

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The case of Ayannuga v Swindells is one that will live in infamy for all residential landlords and letting agents, for it makes clear that unless you dot every ‘i’ and cross every ‘t’, you risk getting smashed by the British justice system.

The case came about after the landlord sought possession of the tenancy deposit after the tenant allegedly fell into arrears. The tenant argued that the landlord had failed to provide all the prescribed information. This charge was not disputed by the landlord, although it was pointed out that the requirement is largely a procedural one, and that the tenant’s deposit had been protected within the requirements of the law, which was indeed the most important thing. The landlord also made the point that the tenant could easily have obtained all the required information by contacting the scheme’s administrator, or merely by locating the information that is available on the internet.

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The first hearing went well for the landlord, having put forward the case that most of the information had, in fact, been provided to the tenant, and that the only deficiencies were related to the way in which the scheme operates, which, it was argued, the tenant could have found for himself without difficulty directly from the provider of the scheme. This line of reasoning was clearly seen by the judge, who dismissed the claim brought by the tenant for the return of the deposit. Common sense had prevailed.

But then the tenant appealed. Last week the Court of Appeal sent shock-waves through the residential lettings industry by overturning the previous decision and awarding the tenant three times the tenancy deposit, the maximum compensation that could have been awarded. Common sense, not for the last time this past week, had been defeated.

Luke Maunder, a property specialist with law firm Barlow Robbins, said, “This case has important implications for residential landlords and residential agents.

“It is not uncommon for minor pieces of information to be omitted from the prescribed information, particularly as the Act allows it to be produced separately from the Tenancy Agreement, and some required items instinctively seem less important as the tenant can find it easily elsewhere.
In the case of Ayannuga v Swindells, the landlord failed to provide details of the procedures to be followed in certain events. Details of the Tenancy Deposit Scheme had been provided, but the omission of the additional information – potentially as simple as including a leaflet provided by the Scheme – has cost him thousands.


“The maximum fine is three times the deposit, but the landlord also forfeits the original deposit, so in reality it is four times. As a deposit is usually at least a month’s rent, a small error can be very costly.”


He warned, “All residential landlords and letting agents need to take note of the important decision in Ayannuga v Swindells and make sure that they provide all the necessary prescribed information, ideally well within the 30 days allowed.”

But, was the Court of Appeal right in its decision? Technically, yes. The prescribed information regulations can often be viewed as just another annoying bit of useless procedural fluff cooked up to make life more difficult for landlords, but the prescribed information is actually very important for tenants.

Shelter and others have been making the point for some time that tenants are largely in the dark in matters relating to tenancy deposits, how they work, and what their rights are. Just because the information is available does not mean that they know that it exists, and it is therefore not reasonable to assume that they can find it.

They need the prescribed information to tell them: which scheme their landlord has opted for, how they can be contacted, what their procedures are, and where in the tenancy agreement they can find out what the landlord is entitled to make a deduction for.

Some tenancy deposit schemes are more helpful to the landlord than others; some will provide a prescribed information form, others will not. But the landlord must be aware that they must serve the prescribed information not covered in the leaflet provided by the scheme, in particular the clause in the tenancy agreement that deals with deductions from the deposit, within thirty days of taking a deposit. Otherwise, what happened in the Ayannuga v Swindells case could happen to you.

 

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