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 received 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 was 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
Deposit Submission and issuing Prescribed Information is FREE as part of McCartan Lettings comprehensive Specialist Let Only service for Landlords, making sure they are not leaving any of their clients at risk.
This is done with the DPS and the deposit is transferred internally with the DPS into the landlords account once the process has been completed, so there isn't anything the landlord needs to do once the tenancy has commenced.
If you want further information or advice regarding Tenancy Deposit Protection legislation and compliance please call McCartan Lettings on 01792 430100
