Spotlight on: Tenant Deposit Protection Law

with Hannah mcCartan - Managing Director McCartan Letting, Killay

From 6th April 2007, it became law for tenants’ deposits to be protected. Before this, there was very little a tenant could do to reclaim their money should a rogue landlord decide to keep hold of it and spend it how they please.

A rolled up british one hundred pound note wrapped with chains and secured with a padlock on an isolated background

Though it is now in its 9th year, many landlords are still getting tripped up by Tenants Deposit Protection Law and struggling to be compliant – and thus putting themselves at unnecessary risk.

Protect the deposit in the required timeframe

The law is now very clear and very strict about how long a landlord has to protect their tenants’ deposit. From 6th April 2012 deposit protection law changed to allow up to 30 days (up from 14 days) for a landlord to submit the deposit from the date it was received. (Note not when the tenancy officially starts).

This change came about due to many landlords not able to keep to the 14 day rule administratively. Under this previous condition, judges were lenient to landlords who could prove the late protection was an administrative oversight; however when the change to 30 days came into effect it was widely reported that no leniency would now be given to any late submissions.

Not providing the correct Prescribed Information

Similarly landlords have 30 days to get the Prescribed Information relating to the tenants’ deposit to the tenant from when the deposit is received. This is usually done at the point of the tenancy commencing as it is best practice to get a copy of it signed by the tenants for the avoidance of any doubt that they did receive it.

What are the penalties for non-compliance?

Deposit Protection law is quite straight-forward and simple to understand so as it is the landlord’s responsibility to understand all his legal obligations, the penalties are quite costly. Firstly, the tenants can claim compensation for up to three times the deposit amount if the deposit is not protected within 30 days of them giving it to the landlord OR if they have not receiv-ed the Prescribed Information also within the 30 days.

Secondly the landlord will not have the right to serve a Section 21 Notice for possession of the property until the deposit has been protected, or returned. This can be particularly complicated if the tenant is in arrears of rent.

Due to the law being very clear, it makes it very easy for tenants to sue landlords for compensation if either of the two elements of deposit protection are not adhered to.

The statute of limitations also now applies to this law which means that even if a tenancy has ended, the tenants will have up to 6 years to make a claim if their deposit was not protected in accordance with the law.

Was my agent supposed to protect it for me?

Unfortunately the liability still lies with the landlord to protect the tenants’ deposit, so it is worth making sure you fully understand the service you are getting from your agent to ensure that it is part of the service you have signed up for.

Most agents who are not managing the tenancy will pass the tenants’ deposit to the landlord, so check your statement carefully for when the deposit was taken, as even if the agent is delayed in getting you the funds, you still only have 30 days from when the deposit was paid to them. Also make sure you have a copy of the prescribed information if issued to the tenants by the agent for your records. If your agent doesn’t do that, make sure you have all the information you need to get it completed and given to your tenants within the 30 days.

If you have a fully managed service then most likely the agent will have the systems and procedure in place to protect the deposit and issue the prescribed information to the tenants. It is still worth making sure who they are registered with and what their procedures are for your own peace of mind.

There are 3 schemes a landlord or agent can register with to hold tenant deposits legally:

The Deposit Protection Service (DPS)

The Tenant Deposit Service (TDS)

My Deposits

McCartan Lettings offers a free Deposit Submission and Prescribed Information in both their fully managed and specialist let only services to make sure that they are not leaving their clients at risk. On a specialist let only service, the deposit is lodged with the DPS and then transferred internally into the landlord’s account, so there isn’t anything the landlord needs to do once the tenancy has commenced.

If you would like advice on whether your deposit has been protected correctly, please call McCartan Lettings today on 01792 430100.

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