Section 21 Notice and Deposit Protection rules

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Validity of Section 21 Notice: Amak Property Investments v Laura Sonny [2016]

This case was an appeal by the tenant following a county court judgement relating to the validity of a s21 notice on the basis that the landlord had not complied with the deposit protection (MyDeposit) scheme rules.

The wording in the relevant Act (Housing Act 2004) has no mention of protecting the deposit as such but states that the landlord or letting agent must comply with the ‘initial requirements’ of the deposit scheme.

These initial requirements would usually mean protecting the deposit and serving on the tenant the required prescribed information, both within 30 days.

If the deposit is not served within 30 days the landlord is in breach of the rules, subject to a fine and cannot use the s21 eviction process. That is unless the deposit is returned to the tenant, in which case the landlord can serve a valid section 21 notice but is still subject to a fine if the tenant should apply to court for compensation.

If the prescribed information is not served within the 30 days, according to the wording in the Act, the landlord cannot use the section 21 process, but in this case the prescribed information can be served late to effect the serving of a valid section 21 notice. However, the landlord is in this case is still be subject to the fine.

Following the failure of Laura Sonny’s defence, filed against the landlord’s s21 possession claim at the county court, the appeal was heard at Central London before Recorder Klein.

Ms Sonny’s defence had hinged around a disputed issue of whether or not the prescribed information had been served prior to the service of the s.21 notice, which the county court had found not to have a reasonable prospect of success, based on the MyDeposits scheme rules, specifying that service of the prescribed information constituted an “initial requirement” of the scheme.

The landlord argued that s.215(2) of the HA 2004 had been complied with as the prescribed information had been served by the time of the service of the s.21 notice.

Ms Sonny’s case was that the scheme rules meant service of the prescribed information was an ‘initial requirement’ and that failure to comply with this, within 30 days meant s.215(1A) applied, and therefore a valid s.21 notice could not be served, unless s.215(2A) had been complied with – the landlord had returned the deposit.

Recorder Klein allowed the appeal and Ms Sonny’s defence was accepted, the appeal judge finding that the s21 notice was invalid because the landlord had failed to serve the prescribed information within 30 days as set out in the scheme’s ‘initial requirements’.

The judge argued that the MyDeposits scheme makes service of the prescribed information an initial requirement, so failure to comply came under the sanctions at s.215(1A) not s.215(2). So the landlord needed to return the deposit to the tenant – with any agreed deductions – before a valid s.21 could be served.

The case underlines the importance of landlords and agents to be fully conversant with whichever scheme they are using, as had the landlord used a different scheme, which does not make serving the statutory information within 30 days an ‘initial requirement’, the notice would have been valid.

This was an appeal heard by a Circuit Judge and not the High Court, therefore it is not binding. However, does give a valuable steer for landlords and agents and for District Judges.

It is also interesting that it gives landlords and agents at least some high degree of confidence that returning the deposit can enable them to serve a valid s21 notice if either the deposit or the statutory information, or both, were not served within 30 days.

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