The Residential Landlord Association’s Landlord Advice Team is on hand to offer free unlimited advice and every week we are featuring a call from one of members outlining their problems and how the team helped them.
This year will be the 9th anniversary of deposit protection and the 9th year as one of the Landlord Advice Team’s most popular topics. As the legislation is constantly changing, many landlords and agents are often bewildered by exactly what they need to do.
This week we had a case where a new member called us to discuss several section 21 notices he had served for landlords across different tenancies that he was being challenged on by Shelter. These tenancies ranged from ones that had started before the deposit scheme right up to the present day. Unfortunately none of the deposits had been protected correctly so the agent needed to take action.
One tenant had been in place on the same tenancy since May 2002. The letting agent served the right section 21 but “the tenancy was well before deposit protection so I’m safe.”
Sadly he wasn’t and the deposit should have been returned or protected correctly before he served the section 21. Luckily he wasn’t liable for the financial penalty. Sadly it wasn’t the case for some others.
Another tenancy had started back in 2004 but he’d renewed it in 2009 when he increased the rent. Again he thought he was safe because the deposit had been taken back in 2004.
Unfortunately the team had to explain to him that when he renewed his tenancy he should have protected the deposit and given the tenant the prescribed information.
He now had an invalid section 21 notice and was liable for the financial penalties for not protecting the deposit. The team advised returning the deposit, getting a receipt for it and then serving a fresh section 21. Unfortunately worse was to come.
As it turned out, all the deposits the letting agent had taken after 2007 had not been protected correctly as he was relying on DPS to provide the tenant with all the deposit information. However the onus is on the landlord or letting agent to provide the tenant with the opportunity to sign the prescribed information and deposit certificate within 30 days.
In this case the agent had protected every single deposit after 2007 within 30 days but he was still in breach because he hadn’t given the tenants all the paperwork. The team had to give him the bad news that he was liable for penalties should the tenants sue him, but he could get his rights to serve a section 21 back if he provided the paperwork now.
For the future he was advised to always provide the prescribed information with the tenancy if he is taking a deposit. This varies from deposit scheme to deposit scheme but it’s vital that everyone involved in the deposit gets a copy of all the paperwork.
This includes guarantors and anyone else who may have paid the deposit besides the tenant, like the bank of mum and dad in the case of students. If you’re a landlord using the RLA’s deposit protection service, our Depositguard tenancy agreements already come with the prescribed information attached.
Rupinder Aujla, Landlord Advice Team Manager said: “A large number of landlords are lost in the world of deposit protection and what they need to do. The advice team is speaking to members daily advising them that they cannot serve a section 8 or section 21 notice due to the non- protection of a deposit correctly at the outset of a tenancy.
“This mystery around deposit protection comes from the changes in legislation and we find many landlords do not understand the differences between the three schemes and what each insurance backed scheme is saying.
“The government is partially to blame in that the Deposit Protection Scheme advises one thing, but the insurance backed schemes have different rules. We are constantly asking members which scheme they protected the deposit with and what information has been given to the tenant or person who has contributed towards the deposit before any notice can be served. It should be one rule across all the schemes.
“Deposit legislation can be a minefield for landlords. The simple answer: A deposit has been taken – protect it within 30 days of receipt – give all the relevant information and if in doubt call the advice line each time you are signing a tenant up to a new fixed term.”
The Landlord Advice Team can be contacted on 03330 142998 or online via the RLA website.