New legislation to protect tenant deposits across the UK is in force. So, what should Landlords be doing?
The Legislation came into force in England and Wales in 2007 and requires Landlords to protect any deposit via an authorised tenancy deposit scheme, such as mydeposits, the Tenancy Deposit Scheme (TDS) and the Deposit Protection Service (DPS). These schemes come in two forms: insurance-based, where the Landlord registers the deposit with the scheme and then holds on to the money themselves; or custodial, where the scheme is responsible for holding on to the deposit until the tenancy ends.
This legislation was brought in to protect tenants, but is it also good for Landlords? Yes, as it does mean that someone else is involved, so Landlords have a third party to adjudicate if there’s an issue. Landlords have complained that some schemes feel biased towards tenants, but if you have a thorough Inventory when the tenants move in and out, that shouldn’t happen.
So what do Landlords get wrong? The biggest issue is that Landlords don’t register the deposit in a recognised scheme within 30 days or send the prescribed information.
What are the consequences? If a Landlord hasn’t carried out certain procedures correctly, it will affect their rights to repossess a property. If a Landlord needs to go down the possession route and hasn’t used a deposit scheme, they must pay the tenant their deposit back. This will alert the tenant to their error and potentially lead to the Landlord being taken to court and fined up to three times the amount of the deposit.
If you are using a reputable Lettings Agent they should register your deposit for you in their scheme, but it’s always a good idea to check if this is the case.
To conclude…. deposits – make sure you are doing it right!
Thank you for taking the time to read this article …we hope you found it useful…the Peach Team