Get ready for new deposit protection rules

Get ready for new deposit protection rules

16:36 PM, 20th February 2012, About 12 years ago 17

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Tough deposit protection rules start soon that close loopholes that let landlords escape fines by returning money to tenants on the steps of the court.

After judges threw out a string of claims from tenants, the government has revised tenancy deposit protection law.

The new rules start from April and affect deposits already held by landlords and letting agents as well as new deposits.

The new rules say:

  • Landlords must protect deposits held under assured shorthold tenancies within 30 days of receiving the money
  • Tenants and anyone else paying towards the deposit must be given information about the scheme protecting the deposit and the landlord’s contact details within 30 days of handing over the deposit

    The new rules call for landlords to deposit payers a copy of the protection scheme’s tenant leaflet as well.

  • Failure to comply with either requirement within 30 days will trigger a statutory penalty of between one and three times the deposit amount. The tenant has no limit on claiming the penalty – this leaves a window of six years after they have left, even if the deposit is refunded in full.

    Renters cannot claim penalties for tenancies ending before the start of the new rules.

Landlords who do not keep to the rules lose their rights to issue section 21 notices if the renter breaches a tenancy agreement or is in arrears.

The rights can only be restored by returning the deposit or a court order – and even then the tenant can still claim the penalty for a landlord failing to comply with the rules.

Existing deposits will be treated as new deposits on the first day of the new rules, giving landlords up to 30 days to bring them under protection without penalty.

Landlords are advised to keep tenancy agreements, deposit protection details and other related documents for six years – which also ties in with keeping paperwork for HM Revenue & Customs by property investors.


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Comments

Steve Masters

20:08 PM, 23rd February 2012, About 12 years ago

I protect all my deposits and give my tenants all the required details... or so I thought !!!!!

After reading this and Mary's original article I realised that I had only given my tenants the deposit protection details and the not the full Prescribed Information pack.

For myDeposits this is the "Deposit Protection Certificate" AND the "Information for Tenants" booklet.

For DPS this is the "Prescribed Information" form that needs to be filled out AND the DPS "Terms and Conditions".

I bet I'm not the only LL who has overlooked his, so thank you Mark and Mary.

In this day and age of internet everything, do we know why the scheme administrators haven't automated this for us? How hard would it be for them to independently provide all this information to the tenant(s) and thus ensuring protection to both tenants AND landlords. Could we lobby them to close this potential loophole?

Mary Latham

15:15 PM, 24th February 2012, About 12 years ago

Good point Mike.  In my opinion anything if we do anything other than allow the AST to become a Statutory Periodic and not alter the deposit in any way we should check to see if we need to do a new protection.

Mary Latham

15:19 PM, 24th February 2012, About 12 years ago

Steve I hate it when good landlords get "caught out" by detail and Im really pleased that you are now covered. 

I don't see a time when the scheme administators take on this task because it is the legal obligation of a landlord but I agree that they could automate their system to help us.  How difficult would it be to make the prescribed information pages 2 and on of the Protection Certificate so that a landlord automatically prints it for his own records and those of his tenants?

11:04 AM, 27th February 2012, About 12 years ago

So the Deposit Protection started on 6 April 2007, so any AST started before that date that have become Statutory Periodic and no alterations have been made to them, are still NOT included in this??

Mary Latham

12:39 PM, 27th February 2012, About 12 years ago

That is correct for England you need to find out if Wales is different.

16:44 PM, 27th February 2012, About 12 years ago

I use DPS and include the Prescribed Information as a section of the Tenancy Agreement (this is because I hand over the Agreement in exchange for the deposit and first month's rent).  All the information requires is available at that time, and signing the agreement meets the requirements of 2(g)(vii) of The Housing (Tenancy Deposits) (Prescribed Information) Order 2007.  I also include a copy of the DPS terms and Conditions stapled with the Agreement.
This avoids the possibility of the tenant claiming that the information was not provided and reduces the number of items I need to get the tenant to sign and to be kept in my files..

Valerie Legenza

13:06 PM, 5th March 2012, About 12 years ago

Hi Mary,

what is the situation with non-AST residential tennancy agreements. Is there still a requirement to protect deposits?

Thanks

Martin

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