2004 Housing Act and which came into force in April 6 2007.
The outcome of the High Court decision was that a landlord is not subject to any of the penal measures providing they protect the deposit before the court ruling.
The sanctions against a landlord for not protecting the deposit in the prescribed time period was that the landlord could not use a section 21 notice to gain possession and that they would have to pay the tenant 3 times the amount of the deposit.
It appears that the failure of the legislation to stand up to court scrutiny was down to the fact that it was poorly drafted. It is not clear at this stage whether the government will take steps to amend the Housing Act to plug this perceived 'loop hole'.
In the meantime we would still advise landlords to continue to protect deposits in accordance with the legislation. However, should landlords forget, or miss the deadline. The message is don't panic Captain Mainwaring....
For more details on the court case Universal Estates v Tiensia and Honeysuckle Properties v Fletcher.
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