The Tenancy Deposit Protection Blunder That Could Cost PurpleBricks Millions

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The Tenancy Deposit Protection Blunder That Could Cost PurpleBricks Millions

At the end of 2021, it came to light that online-only estate agent, Purplebricks allegedly failed to comply with very basic tenancy law, which will likely result in a tenant compensation pot worth millions of pounds, with tenants being urged to check their deposit protection as soon as possible.

It is reported that Purplebricks failed to properly serve legally required documents to tenants explaining whether their deposits have been put into a national protection scheme and this error could date back as far as 2012.

Legally, landlords, or their agents, have to hold renters’ deposits in one of three government-approved national protection schemes (DPS, TDS or MyDeposits) and give certain documents – known as ‘prescribed information’ – to tenants within 30 days of the deposit being paid.

Tenancy deposit protection was introduced on 6 April 2007 as part of the Housing Act 2004. It applies to all assured shorthold tenancies in England and Wales where a deposit is taken. Once they’ve received a deposit, landlords and letting agents have 30 calendar days to protect it.

Failure to do this means the tenant can claim back up to three times the value of the tenancy deposit from their landlord. Some claims can continue to multiply for each breach of the law, up to nine times the value of the deposit amount paid. Tenants have a six-year limitation period in which to make a claim against either the agent or their landlord.

In yet another twist, this could have a knock-on effect where Section 21 Eviction Notices have been served, which may be rendered invalid on the basis that the deposit was not correctly protected.

Purplebricks has admitted that since the company was founded in 2012, it has failed to properly serve the necessary prescribed information.

In an update on its lettings management business, Purplebricks stated:

“During an internal review the company recently became aware of a process issue in how it has been communicating with tenants on behalf of its landlords in relation to deposit registrations. Further enquiries into this matter are currently being conducted and the communications process is now being corrected.”

“In light of the above, the company believes that it is prudent to provide for any potential future claims which could arise under the Housing Act in relation to this regulatory process issue.”

Purplebricks have yet to publicly confirm just how many tenants and landlords were affected by its failure to correctly protect tenancy deposits and they haven’t confirmed just how long they held the deposits, before officially registering them with a government-approved scheme.

This article is provided as a guide. Any information should be used for research purposes and not as the base for taking legal action. Tenant Angels does not provide legal advice and our content does not constitute a client-solicitor relationship.