Landlords have you registered all old deposits held?

by Jason McClean

3 years ago

Landlords have you registered all old deposits held?

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Landlords have you registered all old deposits held?

Landlords are being urged to register all deposits they have taken from tenants with an approved protection scheme before 23 June or face four-figure fines.register

Historical deposits, such as those taken before 6 April 2007, must also be protected following the recent Deregulation Act in which the Government attempted remove red-tape across the sector.

Landlords must register the deposit with an approved scheme such as the Tenancy Deposit Scheme, MyDeposits, or the Deposit Protection Scheme.

The fines for failure to do so are unlimited and up to a maximum of three times the initial deposit plus the deposit – a hefty amount in many cases.

“The deadline of 23 June is looming, and it’s not just hefty fines that landlords must be wary of, they may also find it difficult to remove tenants when they wish to if they have failed with their deposit obligations,” explains a spokesperson for landlord insurance providers Discount Insurance.

With tenants typically putting down six weeks rent upfront and the average monthly UK rent currently standing a £768, this means a likely deposit of around £1,152 –even higher in areas such as London.

Although there are no firm figures on how many landlords have not registered deposits held, some experts believe up to one in three landlords in England and Wales could face fines, with those who have had rolling tenants for many years most likely to fall into the trap.

“Those who have had the same tenants for several years could be most likely to caught out as they may not be aware that they needed to register deposits,” added the spokesperson.

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Comments

Neil Patterson

3 years ago

Hi Jason,

I hope few property118 readers will get caught out and it is always worth reminding people 🙂

Please also see Tessa's article commenting on the new rules >> http://www.property118.com/landlords-rejoice-superstrike-problems/73552/

Michael Barnes

3 years ago

It is my understanding that where a tenancy became statutory periodic before 6 April 2007 landlord does not need to be protected, and there will be no penalty for not protecting such deposits.

The article suggests that this is not the case.

Ross McColl

3 years ago

My understanding is that all deposits now need to be protected, even if they became a SPT prior to 6th April 2007. Failing to do so in this case will not result in a financial penalty but will stop the landlord from being able to serve a valid Section 21 until this has been done.
Please correct me if I am wrong.
All the best.

TDS

3 years ago

Take a look at the TDS infographic: http://www.tds.gb.com/eshot/images/Deregulation%20Act%20tenancy%20deposit%20protection%20infographic%20reduced.jpg

The law confirms that a section 21 notice cannot be served on any tenancy where a deposit is held and not protected.

If the tenancy turned periodic before 6 April 2007, the penalties for non-protection of the deposit do not apply but the section 21 notice cannot be served. To do so, the landlord would need to either protect or return the deposit.

If the deposit was taken before 6 April 2007 and the tenancy turned periodic after that date, the full penalties for non protection will apply from 24 June onwards.

Michael Barnes

3 years ago

Reply to the comment left by "Ross McColl" at "30/04/2015 - 21:09":

My understanding is that all deposits now need to be protected, even if they became a SPT prior to 6th April 2007.
Please correct me if I am wrong.

Yes, you are wrong.
Your second sentence is correct.

Such a deposit only needs to be protected in order to serve a valid S21 notice.

Dr Rosalind Beck

3 years ago

Hi.
Does anyone know if the same law applies in Wales?
Thanks.

Jay James

3 years ago

Reply to the comment left by "Ros ." at "04/05/2015 - 12:50":

http://www.legislation.gov.uk/ukpga/2015/20/pdfs/ukpga_20150020_en.pdf
Try checking intro to the Act or the related sections.

If law is enacted by the UK parliament, it usually applies equally to both England and Wales unless stated otherwise.
I'm not a lawyer, so dont take that for gospel.

TDS

3 years ago

Reply to the comment left by "Ros ." at "04/05/2015 - 12:50":

Hi Ros,

Yes this law does apply in Wales.

Michael Barnes

3 years ago

Reply to the comment left by "Ros ." at "04/05/2015 - 21:04":

Ros,

I don't see what your problem can be to produce that response.

All the change in law is doing is saying "if you have inadvertently broken the law (because courts did not interpret it as parliament intended), then you now have the opportunity to rectify the situation". i.e. if you took a deposit before 6 April 2007 and tenancy went statutory-periodic on or after 6 April 2007, and you did not protect the deposit within 14 days of going SP, then you now have the opportunity to protect it and not face any legal penalties for not protecting at the right time.

I have seen lots of reports in the press, like this one, that incorrectly state "all deposits taken before 6 April 2007 must be protected".

Where a tenancy was taken before 6 April 2007 and the tenancy became statutory-periodic before that date, there is no legal requirement to protect the deposit. However, a S21 notice cannot be enforced in a court if the deposit has not been protected.

I also believe (but I am sure I will be corrected if I am wrong) that you can issue a S21 notice when the deposit is not protected, despite lots of people including lawyers saying you cannot: you just cannot take any legal action based on it if tenant refuses to leave.

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