Landlords had until May 5th 2012 to protect deposits which had not yet been placed in one of the three governments approved schemes.
DepositGuard (run by the Tenancy Deposit Scheme (TDS)) are advising all members to continue to protect their deposits late if they failed to do so within the new 30 day deadline. TDS will continue to adjudicate cases within their Alternative Deposit Resolution (ADR) service where the deposit has not been registered correctly within the 30 days, provided they follow the scheme rules by the time of the adjudication.
Unfortunately, we cannot control the use of the small claims court and cases taken here will be subject to the penalties of one to three times the deposit. As is the same for cases which go through the ADR and tenants later go through the small claims court to claim against incorrect protection of the deposit. This can be up to 6 years after the end of the tenancy.
Remember to correctly protect a deposit you must use one of the government approved schemes and give the tenant a copy of; the prescribed information, deposit protection certificate and scheme rules.
Don’t miss out the RLA’s low-cost deposit protection service DepositGuard allowing you to protect deposits from as little as £15 and keep hold of the deposit. This is exclusive to members so register today for free and start protecting your deposits straight away.
For further information visit www.rla.org.uk/depositguard/
So, what happens if I have missed the 30 day deadline?
If an existing tenant applies to the court they will order you to repay the deposit or protect it, and pay the tenant between one and three times the deposit.
If the tenancy has ended, the Court may order you to repay the deposit. This suggests that deductions from the deposit may still be claimed. It also seems likely that the Court won’t make an order if the deposit has already been repaid to the tenant. However the penalty of between one and three times the deposit still applies.
My deposit is from before April 2007, do I need to protect my deposit?
No – provided you have not made any changes to the tenancy e.g. increase in rent, new terms etc. If you have any doubt you should protect the deposit.
I protected by deposit before May 5th but I forgot about the prescribed information, can the tenant still claim?
Yes – you cannot serve a Section 21 Notice until the Prescribed Information has been served (this can be later than 30 days) but the tenant can still claim for the incorrect protection of the deposit and be awarded the penalty.
The above are only guidelines and interpretations of legislation; until test cases have gone through the Court we cannot provide definitive advice. Each case within the small claims court will be dealt with on an individual basis.