Landlords Warned About Deposit Protection Penalties

Thursday, June 11, 2015

Landlords Warned About Deposit Protection Penalties

Landlords Warned About Deposit Protection Penalties

TDS Warns Landlords That They Only Have A Few Weeks Left
To Comply With New Deposit Protection Legislation

The Tenancy Deposit Scheme (TDS), has warned landlords that time is running out after the new Deregulation Act came into force on March 26th 2015.

The intention of introducing the new act was to clarify PRS tenancy deposit protection requirements. This means that more private rental sector (PRS) tenancy deposits are now under deposit protection law as long as they were received before April 6th 2007.

Landlords will only have until only June 23rd to register tenants deposit funds in one of the three Government approved deposit protection schemes, otherwise they could face a penalty of up to 3 times the value of the original deposit and face restrictions on taking possession of their property back from the tenants.

A summary of the key changes is included below and landlords can utilise the TDS infographic reproduced below this article to check individual situations to decide if they need to take action.

  • Landlords holding a deposit taken before April 6th 2007 on an Statutory Periodic Tenancy which began before that date, will have to protect the deposit prior to serving a  Section 21 notice. There is no financial penalty for the deposit not being protected prior to this.
  • Deposits taken before April 6th 2007 where the Statutory Periodic Tenancy began after that date must be protected by June 23rd 2015.
  • Deposits only have to be protected and Prescribed Information (PI) served at the start of the original tenancy. New PI and protection is required on replacement tenancies only if there are changes to the tenant(s),landlord(s), premises, or deposit protection scheme. This applies retrospectively to April 6th 2007.  However, TDS scheme rules do require re-protection of deposited funds in certain other circumstances.
  • It is confirmed that letting agent details can be given in place of the landlord’s on Prescribed Information if the agent is protecting the deposit.

There have been calls to clarify the deposit protection legislation following a series of controversial court rulings regarding what tenant deposits must be protected and in what circumstances prescribed information documents must be given to tenants.

Even if landlords fail to give tenants full written information about deposit protection they could still face the financial penalties, even if the deposit is protected.

Deposits must now be protected by June 23rd 2015 if deposit funds were received before April 6th 2007 and the tenancy has subsequently been renewed on a periodic basis after that date.

If a tenancy renewed on a periodic basis before April 6th 2007 then deposit protection is not compulsory, however, landlords will be prevented from regaining possession of their rental property assets using a standard section 21 notice unless they protect the tenant’s deposit in one of the three approved deposit protection schemes or return the deposit money to the tenants.

TDS Chief Executive, Steve Harriott, said; “Landlords have only a matter of weeks to comply before the deposit protection amnesty ends and financial penalties take effect. A small number of tenancy deposits are exempt but I would urge any landlord who holds an unprotected deposit to register it online with Tenancy Deposit Scheme immediately to avoid any future problems. The act has highlighted that many landlords have failed to protect deposits even under the existing laws. We have seen a surge in landlords contacting us in recent weeks. Many have only just become aware that they should have already protected deposits; a stark reminder that thousands of landlords have been falling foul of deposit protection law, often unknowingly.”

The introduction of the Deregulation Act is a source of relief for many landlords and letting agents following the Court of Appeal’s decision in Superstrike v Rodrigues (2013) that implied that landlords could be penalised for not serving new prescribed information to tenants at every renewal even if no circumstances had changed.

This was seen as straying from the original intentions of the tenancy deposit schemes and now documents only need to be issued a second time if there is a change in tenants, landlord, property, or the chosen tenancy deposit protection scheme.

Tenancy Deposit Protection Deregulation Act

Tenancy Deposit Protection Deregulation Act

This was written by Mike Clarke. Posted on at 11:30 am. Filed under Landlord News. Tagged , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.