Earl Cathcart proposes changes to the Housing and Planning Bill, to streamline deposit repayments

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At the House of Lords Committee on Tuesday 1 March, The Right Honourable Charles, Earl Cathcart will be proposing an amendment to the Housing and Planning Bill to address the issue that landlords and tenants can face when reclaiming a deposit held by a custodial tenancy deposit scheme where the other party is not contactable.

Under the current legislation as set out in the Housing Act 2004, landlords are required to protect tenancy deposits by either registering the deposit with an insured tenancy deposit scheme or physically transferring the tenancy deposit to a custodial tenancy deposit scheme which holds the deposit during the tenancy.

If the landlord uses a custodial scheme, at the end of the tenancy both the landlord and tenant have to agree on the amount of the deposit to be returned to each party in order for the scheme to release the funds. If no agreement can be made, the matter can be referred to the scheme’s dispute resolution process, or to the Courts. However, where a landlord cannot contact the tenant about their proposed deductions, they currently have to make a Statutory Declaration before a solicitor - setting out the deductions they wish to make and why the tenant is not contactable - and forward this to the custodial scheme. It is a long process which can lead to delays and additional costs for the party making the Statutory Declaration.

In the Bill, the Government has already included a streamlined possession procedure for use when a tenant has abandoned a property. This presents an opportunity to amend Schedule 10 of the 2004 Housing Act to similarly streamline the custodial deposit repayment procedure where a tenant or landlord cannot be contacted at the end of the tenancy.

Earl Cathcart will propose that we adopt a similar process to that operating in Scotland and Northern Ireland where the portion of the deposit requested is paid by the custodial scheme to the party requesting repayment once the scheme is satisfied that the other party has failed to respond.

This will mean that the deposit is repaid more quickly (without recourse to solicitors and Statutory Declarations) whilst ensuring that if the other party later reappears, the tenant or landlord can seek to recover any disputed deposit through the Courts. 

Commenting on Earl Cathcart’s proposal, Tenancy Deposit Scheme Chief Executive Steve Harriott said,

“I welcome the amendment Earl Cathcart is tabling for the custodial scheme, as in our view significant streamlining of the deposit repayment procedure where parties fail to respond will lead to reduction in time, expense and worry for landlords and tenants who need to get the deposit repaid.”

Earl Cathcart’s amendment http://services.parliament.uk/bills/2015-16/housingandplanning/documents.html - see Marshalled List of Amendments to be Moved in Committee (dated 05.02.2016, page 10)

Posted by on 11 February 2016

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