Let’s talk straight – a deposit is not the landlord’s money. Nor is it a way to ease the cash flow in a letting agency. It’s the tenant’s money. End of. Which is why the Government have made it a legal requirement that it’s protected in a tenancy deposit scheme. Yes, at the end of the tenancy there may be issues, and it could well be that the vacating tenant doesn’t get all the deposit back, but until then the deposit needs protecting.
The rules apply to all assured shorthold tenancies entered into after 6 April 2007. The deposit has to be registered with an approved, government-backed scheme and there are separate arrangements for England and Wales, for Scotland and for Northern Ireland. Landlords or letting agents have 30 days from receipt of the funds to register them. At the end of the tenancy, the agreed deposit repayment has to be made within 10 days of settling the amount. Holding deposits, paid over before a tenancy agreement is signed, do not need protection, but as soon as the agreement is signed, and that ‘holding deposit’ becomes the real thing it has to be put into a scheme.
So far, it’s straightforward, but a landlord’s duties don’t end there. Within the 30 days, landlords have to give the tenants information about the deposit, the scheme it’s in and instructions on how to proceed if there are any problems at the end of the tenancy. A full list of requirements can be found at here.
Do it right, or else
If you’re a landlord or agent, don’t, whatever you do, ignore or forget your responsibilities. Although tenancy deposit schemes might feel like another administrative burden, the courts are coming down hard on any attempts to avoid the legislation and there are some stiff penalties for failing to comply. You may find the courts order all of the deposit to be repaid, or put into an official scheme within 14 days. It’s also possible that the courts will order the landlord to pay the tenant as much as three times the original deposit sum. In addition, you may find you cannot get your property back at the end of the tenancy. If you get in that mess, talk to our legal team for advice.
Regulated and professional
We’d like to end on a positive note. The official schemes are making the process easy to follow and offer free dispute resolution services should things go that way. All things considered, they’re contributing to an increased level of professionalism in the industry.
If you’d like to learn more about your responsibilities as a landlord or agent, why not get in touch? We’d love to hear from you. Call us on 0333 577 9050 anytime.