Commentary on Sections Section 4:.Limit on tenancy deposit amount
This section inserts new Articles 5ZC and 5ZD into the 2006 Order.
New Article 5ZC(1) limits the amount of deposit that can be required to be paid or retained in connection with a private tenancy to no more than 1 months’ rent.
Article 5ZC(2) explains what it means for a person to require the person to whom a tenancy deposit would otherwise be repaid to consent to the retention of the deposit.
Article 5ZC(3) provides a definition of 1 month’s rent in cases where the rent under a private tenancy is not payable monthly.
Article 5ZC(4) provides that any landlord or other person who requires a tenancy deposit in excess of 1 month’s rent to be paid or retained in connection with a private tenancy is guilty of an offence under this Order.
Article 5ZC(5) provides that where a person is convicted of such an offence and has received or retained a tenancy deposit in excess of 1 month’s rent, the court that convicted the person has the power to order restitution of the excess to the person who paid it.
New Article 5ZD makes provision concerning the recoverability of a tenancy deposit paid in excess of 1 month’s rent. Paragraph (1) provides that a landlord or other person who has not been paid a tenancy deposit cannot recover that deposit to the extent that it exceeds 1 month’s rent under the tenancy. Paragraph (2) provides that a tenant or other person who has paid a tenancy deposit or had a tenancy deposit retained can recover the deposit to the extent that it exceeds 1 month’s rent.
Paragraph (3) explains when a tenancy deposit is retained in connection with a private tenancy.
Subsections (3) and (4) of the section amend Articles 68 and 68A of the 2006 Order respectively. The amendment of Article 68(1) ensures that the offence under Article 5ZC(4) is punishable on summary conviction with a fine not exceeding level 4 on the standard scale. By providing that this offence is an “offence under this Order”, it comes within Article 68(3) and as such can be prosecuted by district councils.
The amendment of Article 68A provides that fixed penalty notices can be given in respect of the offence. The amendment also provides that the maximum fixed penalty amount is one-fifth of the maximum fine payable on summary conviction.
Subsection (5) explains how certain provisions in Articles 5ZC and 5ZD are to have effect. Paragraphs (a) and (b) ensure that the offence in Article 5ZC(4) can only be committed where a “requirement” is made on or after commencement of the section.
Paragraph (c) ensures that Article 5ZD(1) does not prevent the recovery of a tenancy deposit in excess of 1 month’s rent under a legal obligation (for example a contractual obligation) that existed before the commencement of the section.
Paragraphs (d) and (e) limit the effect of Article 5ZD(2) to deposits paid or retained on or after the commencement of the section, while also preventing recovery of deposits paid or retained on or after that time where they were paid or retained in connection with an obligation or right that existed before the commencement of the section (such as a contractual obligation to pay the deposit or contractual right to retain the deposit).