MY tenant paid a deposit of £500 to me at the beginning of the tenancy.

I have kept the deposit safe. He is now claiming that I have not placed the deposit in a Tenancy Deposit Scheme and has issued court proceedings against me claiming £2,000.

I am told that I must pay this amount because I failed to deal with the deposit properly.

Is this correct, and if so is there anything I can do about it?

SINCE April 2007, it has been a legal requirement that all deposits paid relating to an Assured Shorthold Tenancy (AST) must be protected in an approved Tenancy Deposit Scheme (TDS).

Failure to secure the deposit or to comply with the statutory requirements to provide information concerning the TDS will mean that a landlord can be ordered to repay the deposit plus a sum of three times the amount of the deposit.

Furthermore, a landlord will not be entitled to take possession proceedings under Section 21 of the Housing Act 1988.

The rules are complex.

Even where the deposit has been properly secured, failure to give prescribed information to a tenant means that a landlord will still be liable to repay the deposit and to pay compensation to the tenant.

But all is not lost.

In a recent case, the Court of Appeal ruled that the landlord is able to correct the position before the case comes to court.

If the landlord fully complies with the requirements, then he or she will escape the penalty.

Landlords need to ensure that they comply fully with the strict requirements for securing the deposit and also give the prescribed information about the TDS to the tenant.

But provided you act quickly and meet your obligations before the court hearing, you may still be okay.

The best advice is to get legal advice, and act on it – fast.

Any other landlords, or indeed tenants, who are unsure of the obligations surrounding ASTs should seek advice from a solicitor.

■ Tom Lisgo is a Partner at BHP Law. For more information, call him on 0191-221 0898.