Landlords are being warned that they have just a matter of days to protect tenancy deposits, or face thousands in fines. RLA ‘DepositGuard’ partners the Tenancy Deposit Scheme (TDS) have an important update for landlords holding deposits from 2007.
The new Deregulation Act means more tenancy deposits are now under deposit protection law if received before 6 April 2007, and gives landlords until only 23 June to register them in a government approved scheme. Otherwise they face a penalty of between one and three times the value of the deposit and restrictions on regaining possession of their property.
A series of controversial court rulings brought urgent need to clarify the law when consternation arose over which deposits must be protected and in what circumstances prescribed information documents must be given to tenants. If landlords do not give tenants full written information about their protection they still face the fine, even if the deposit is protected.
Deposits must now be protected by 23 June if received before 6 April 2007 and if the tenancy renewed on a periodic basis after that date. Government approved scheme, the Tenancy Deposit Scheme (TDS), has warned landlords that time is running out.
Chief Executive Steve Harriott said;
“Landlords have only a matter of weeks to comply before the amnesty ends and penalties take effect.
“A small number of 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.”
If a tenancy renewed on a periodic basis before 6 April 2007 deposit protection is not compulsory. However the landlord will still be prevented from regaining possession using the standard section 21 notice unless they protect or return the money.
Steve Harriott also said 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 new law has also been the source of great relief for landlords and letting agents. The Court of Appeal decision in Superstrike v Rodrigues (2013) came with the implication that landlords could be penalised for not serving new prescribed information to tenants at every renewal even if no circumstances had changed. A requirement widely seen as straying from the intentions of the scheme, documents now only need to be issued a second time if there is a change in tenants, landlord, property, or tenancy deposit protection scheme.
To encourage those with unprotected deposits to act, landlords are being given a 50% reduction in online deposit protection fees by TDS if registering for the first time. Landlords can access the discount by visiting www.tds.gb.com and joining as a TDS for Landlords member by 23 June. The Scheme is free to join, and with the discount landlords can protect from £7.35 per deposit.
More information including an infographic about the Deregulation Act is available on the Tenancy Deposit Scheme website: http://blog.tds.gb.com/blog/do-you-need-to-act-on-the-deregulation-act-check-the-tds-infographic/
Be sure to check the RLA “Deposit Protection from March 26th 2015 onwards” for up to date guidance on your requirements as a landlord taking on, and subsequently protecting deposits.