The Cheque Dilemma: How Can a Landlord ‘Return’ a Deposit?

On 6th April 2007, new rules came into effect concerning deposits paid in relation to assured shorthold tenancies.

A landlord, or their agent, currently has 30 days (running from the date the deposit is received) to protect it with an authorised deposit scheme. Prior to 6th April 2012, the time limit was 14 days.

The consequences of failing to comply with the deadline are two-fold:

  1. The tenant could make a claim for compensation, capped at a maximum value of three times the deposit amount
  2. Where no such claim has been made, the landlord will not be able to serve a valid ‘section 21’ notice on the tenant, unless and until the deposit has been ‘returned to the tenant’ (as per section 215 of the Housing Act 2004). This return can be subject to deductions, but the tenant must have agreed them.

This does however raise the question – what constitutes the proper ‘return’ of a deposit? This issue is particularly pronounced where the deposit is returned by cheque, as it is at the tenant’s discretion as to whether they cash it or not.

Prior case law has failed to reach a clear consensus. This question has now been further examined in the case of Richworth Ltd v Billingham [2023] EW Misc 8 (CC).

The case was initially heard in the County Court at Clerkenwell and Shoreditch. Mr Billingham’s tenancy had commenced in 2011 and the landlord had failed to protect his deposit.

On 26th April 2022 the landlord issued a letter to the tenant enclosing a cheque for his deposit amount, and on 5th May 2022 the landlord’s solicitor issued the tenant with a ‘section 21’ notice seeking possession.

Mr Billingham defended the resulting possession claim, on the basis that (1) he had not cashed the cheque and (2) the landlord had now changed banks, so the cheque was void.

The claim was beset by distracting procedural issues. To the extent that the deposit was considered, the Judge at first instance stated that ‘[the tenant] has not ever intimated, until today, that he was not prepared to accept the cheque… the Housing Act could very easily have said that the tenant must be paid, but the language of return is used. It is difficult to see that the delivery of a cheque is not returning the deposit’.

The possession order was made at first instance, but Mr Billingham appealed the decision. The appeal was ultimately allowed, and the matter remitted back to Clerkenwell.

The appeal was heard before His Honour Judge Luba KC at the County Court in Central London, who made the following useful comments:

  • ‘The Judge was wrong to hold, that any special or different approach was to be taken to the word “returned” as distinct from the use of the words “repaid” or “given back” or even “reimbursed”;
  • ‘A repayment may be made by cheque. That may be the result of express agreement to accept payment by cheque or of the imputation of agreement by the absence of rejection within a reasonable time from receipt. Further… if presented and honoured, the date of payment is the date of delivery of the cheque to the holder’;
  • ‘A tenant may or may not be bound to accept a payment tendered by cheque. That depends on the facts. A failure to reject a cheque may be taken as an implied acceptance… whether such time has passed as to amount to implied acceptance will depend on the facts and circumstances.’
  • ‘To the extent the Judge… found “non-communication” [of non-acceptance of the cheque] not only relevant but the sole issue and determinative, she was wrong. The facts as to what happened after the cheque was ‘received’, in the sense of it coming to the notice of the tenant… are certainly material. But so too are any relevant dealings between the parties as to payments, or receipt of monies, prior to the receipt of the cheque’.

Conclusion – is return by cheque adequate?

The appeal judge was keen to note that each case will hinge on its specific facts.

Factors for a landlord to consider may include the terms of the tenancy agreement, how much time has elapsed since the cheque was given, and whether it can be evidenced that the cheque should have come to the tenant’s notice.

Wherever possible, it is advisable for a landlord to return a deposit via an alternative method, such as bank transfer.

The government has recently introduced a draft of the Renters (Reform) Bill to Parliament, as part of its ongoing commitment to abolish ‘no fault’ evictions. The contents of the bill are still being debated, so it remains to be seen how the tenancy deposit requirements may interplay with possession proceedings in future, should the bill pass.

If you are a private landlord in need of assistance, MSB’s private landlord team can be contacted on

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