Under the Housing Act 2004 a landlord who received from a residential shorthold tenant a deposit in connection with the tenancy had 14 days to pay it into a recognised deposit scheme. If the landlord failed to do so, firstly no section 21 notice could be served bringing the assured shorthold to an end purely on the assured shorthold ground and on an application to the court by the tenant the court could order either the deposit be returned or paid into a recognised scheme AND the court had to order the landlord to pay a penalty to the tenant of three times the deposit. Some sanity has been introduced by the Localism Act 2011 section184 which amends these rules (on a date to be fixed though). The amendments give the landlord 30 days to place the deposit with a recognised scheme and give the court a discretion to award to the tenant a penalty of between one and three times the deposit.
