Tenancy Deposit Protection legislation changes at midnight on 5th April DO NOT GET CAUGHT OUT!

by Mary Latham

16:00 PM, 12th March 2012
About 8 years ago

Tenancy Deposit Protection legislation changes at midnight on 5th April DO NOT GET CAUGHT OUT!

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Tenancy Deposit Protection legislation changes at midnight on 5th April DO NOT GET CAUGHT OUT!

I am going to keep it simple I have written two articles with full details but here is the short version including TWO NEW WARNINGS

  • A tenant’s deposit must be protected within 30 days of taking it for all deposits taken on or after 6th April.
  • Existing deposits that were taken more than 30 days ago must be protected by midnight on 5th April.
  • When you sign up a new AST and rollover a deposit this is deemed to be a new tenancy and the deposit must be protected again if it is covered by one of the insured schemes.
  • Any monies taken to cover loss of rent or damages or losses to landlords property is a deposit regardless of the name it may be given.
  • A guarantee or bond is not a deposit unless money changes hands and does not need to be protected.
  • A deposit protection fee may not be charged to the tenant but an admin fee can be charged for unspecified administration services.
  • The protection fee is tax deductible.
  • The deposit protection certificate and prescribed information must be given to the tenant(s) and to any third party who provided the deposit.
  • A Section21 notice will not be enforceable unless:
  1. The deposit was protected within 30 days or has been returned to the tenant prior to the issue of the S21 Notice
  2. The deposit protection certificate and prescribed information was given to all tenants and any 3rd parties involved

TWO NEW WARNINGS

  • If you are using the custodial scheme make certain that you give them valid contact details for the lead tenant, failure to do so meant that last autumn according to the DPS website –
  • “Over 8,000 deposit repayments valuing almost £5 million are waiting for the response of the lead tenant before the deposit can be repaid”.

I don’t imagine that these tenants expected their deposits to be returned, otherwise I would have thought that they would be chasing DPS and it is fairly safe to assume that much of this money is due to landlords.
One of the mistakes often made by landlords who let to students is to give the DPS the students’ university email address which is closed when the student graduates.

  • The deposit must be protected in the name of the registered property owner (landlord) unless you are registered with one of the schemes as an Agent

Last week I received a call from a landlord who has 150 deposits protected with one of the insured schemes. During a dispute it became known to the scheme that the deposit in question was protected in the name of the landlord’s son after they had spot checked at Land Registry! The scheme has said that this deposit protection is invalid. It appears that many of this landlord’s deposits were protected in his sons name and now they must be newly protected before midnight on 5th April otherwise they will fall foul of the legislative changes. Ouch!

There are many potholes in the road for landlords, but tenants deposit protection is about to become a minefield and I hope you will forgive me for banging on. I will only post further warnings if I become aware of new issues.

The articles where more details can be found are here

The Devil is in the detail

Further warnings to landlords about tenants deposit protection



Comments

16:34 PM, 12th March 2012
About 8 years ago

Hi Mary,  

Was just wondering in regards to deposits taken in the run up to this change am I correct in thinking that if a deposit is received right up until midnight on the 5th April that it still must be lodged within 14 days?

Mary Latham

19:11 PM, 12th March 2012
About 8 years ago

Yes that is correct legally, however, because of a piece of case law that happend last year deposits can be protected late until the law is tighned up on 6tth April from that point we will have 30 days for new deposits or new ASTs with carried over deposits

19:43 PM, 12th March 2012
About 8 years ago

How on earth did a landlord who has a portfolio of 150 properties not know about that deposits have to be in his or his LA name!?
Different if the son owns the properties.
If a LL such as this doesn't know deposit regulations, what hope for alittle LL!? 

Mary Latham

23:46 PM, 12th March 2012
About 8 years ago

You don't know what you don't know Paul.

The father has retired and his son is now running his property lettings - an easy mistake.  The deposit was protected and the prescribed information given why is the name of the person protecting the deposit an issue?

4:56 AM, 13th March 2012
About 8 years ago

My understanding is that the DPC has to be in the name of a LA or the owner of the property, who defacto is the LL whether retired or not.
For confirmation waht are the actual requirements as to whose name goes doen on the DPC application form?.

12:31 PM, 13th March 2012
About 8 years ago

Thanks Mary

17:36 PM, 13th March 2012
About 8 years ago

Thanks for informative article as ever Mary. Can I query where in the new rules it says you cannot charge the tenants for the cost of the protection? I think it is more transparent to do this rather than call it an admin fee?

7:44 AM, 15th March 2012
About 8 years ago

Hi Mary

I'm a bit confused about whether charging a fee to the tenant for protecting their deposit is legal. Letting agents do it, so why not LL? In your article above, you refer to a protection fee saying it is tax deductable. Please clarify

Mark Alexander

8:13 AM, 15th March 2012
About 8 years ago

It's certainly not illegal, charge according to Market forces and your business model, my family all charge.

Steve Masters

9:13 AM, 15th March 2012
About 8 years ago

Thanks to your previous article on the subject I realised that I had not supplied ALL the proper 'prescribed information' to my tenants. I have now done that and got them to sign my copy. As this was done before the 6th April deadline I trust this will suffice.

You mention that if an AST is renewed and the deposit rolls over it needs to be re-protected if it is by an insurance based scheme. What does that entail? In addition to paying the fee do I still need to issue all the 'prescribed information' again?

What if a renewed tenancy is protected by a custodial scheme? Is there anything to do?

What is the difference between when an AST is renewed, when it is extended or when it is allowed to roll over into a periodic tenancy?

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