Landlords operating in the private rental sector have to, by law, ensure that their tenants’ deposits are protected. This legislation came into force in April 2007 to help prevent rogue landlords from retaining tenants’ deposits without genuine justification. Prior to this date, tenants had little recourse when it came to getting their deposit money back other than taking the matter to the small claims court.
Over the years, Tenant Deposit Protection scheme rules have developed into a robust and fair system for protecting tenants’ deposits. However, many do-it-yourself landlords, who don’t employ the services of a letting agency for example, are not submitting the deposits within the stipulated timescale. What’s more, they are not providing information about the deposit protection scheme to the tenants within this same timescale, leaving them open to financial risk as tenants will have the right to claim three times the amount of the deposit as compensation.
Hannah McCartan, Managing Director at McCartan Lettings in Swansea explains why it is so important for landlords to submit a deposit correctly:
Tenant Deposit Protection Time Frames
There can no longer be any confusion with regard to the timescales that landlords have to adhere to in order to protect their tenants’ deposits. From April 2012, the law changed allowing up to 30 days for a landlord to submit the deposit funds from the date it was received (and not the date that the tenancy actually began).
Previously the stipulated timescale was 14 days but many landlords were struggling to meet this deadline. Whereas some leniency was offered to landlords who could prove that the late submission was an admin error, now the courts believe that 30 days is adequate time to submit the deposit into a protection scheme and are longer lenient with those who don’t comply.
What’s more, landlords must also provide details of the Prescribed Information relating to the tenants’ deposit scheme to the tenant within the same 30 day period. It is best practice to pass on this information at the start of the tenancy, ensuring that the tenant signs each page of the document as proof that they have received it.
Penalties for Non-Compliance
The penalties for non-compliance with Deposit Protection law can be costly. Not only does a landlord run the risk of prosecution by the courts, but also tenants have the right to dispute and claim compensation of up to three times the amount of the deposit if:
1. The deposit is not submitted to a Deposit Protection Scheme within 30 days of receipt of payment
2. They have not received details of the Prescribed Information within 30 days of receipt of payment.
In addition, landlords will not be able to serve a Section 21 Notice for possession of the property until the deposit has been protected, or returned, even if the tenant is in rent arrears (which makes the situation even more complex to sort out).
Deposit Protection law is very clear, making it easy for tenants to take landlords to court for compensation if they have not followed both of the above actions within the 30 day deadline. As the statute of limitations applies to this legislation, tenants now have up to six years to make a claim if their landlord has not protected their deposit as outlined.
Landlord and Agents’ Responsibilities
Landlords who use the services of a professional Letting Agency should ensure that they understand their own responsibilities and those of the agent. It is the landlord who is liable for protecting the tenant’s deposit. So, even if the agency has taken the payment on your behalf and then passed the funds onto you, as the landlord you still have submit the deposit to a protection scheme 30 days after the agency took the original payment and not from the date you actually received it.
Your agent should also provide the tenant with the prescribed information within the 30 day period. However, as a landlord you have a responsibility to ensure that this has happened within the timescale. You should also ask your agent for a fully signed copy of the Prescribed Information for your records. If a tenant is seeking compensation for non-compliance, again it is you, the landlord, whom they will sue.
Provided you are dealing with a professional, accredited agency like McCartan Lettings, they will have in place robust and stringent procedures and systems to protect the tenant deposit and provide the prescribed information. From a landlord’s perspective, it is sensible to check which scheme your agent is signed up to ensure it is viable and legal.
The three Deposit Protection Schemes that landlords or agents can legally sign up to are:
The website of each of these schemes provides in depth information with regard to landlords and tenants rights and responsibilities.
Professional Letting Agency Service
McCartan Lettings offers landlords a free Deposit Submission and Prescribed Information in their specialist tenants find only service in order sure full compliance and to protect their clients from possible litigation.
The team at McCartan works with the DPS which means that once submitted to the DPS, it is automatically transferred to the landlord’s deposit protection account. So their landlords can rest assured that they are fully compliant with Deposit Protection law and need take no further action once the tenancy has started.
For further details on McCartan Lettings range of services and, in particular how they help landlords ensure they meet the Deposit Protection legislation, call us today on 01792 430100.