Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.

Tenancy Deposit – I have a tenant who has been in residence since August 2008. She tells me that I have not fulfilled my legal obligations by putting her deposit in one of the schemes, and informing her of this, and that she could be due compensation from me of three times the deposit amount. This seems to be the case, what can I do?

Despite the Deposit Protection legislation being in force since 6 April 2007, many private landlords are still not aware of the requirement to protect the deposit in an approved scheme and to inform the tenants of the scheme and its rules, by a statutory notice, within 14 days of taking a deposit.

The penalties for not doing this are quite serious for the landlord: the tenant being entitled to three-times the deposit in compensation and the landlord being barred from using the s.21 possession procedure.This legislation requires the landlord to make some important decisions from the start:

  1. To register with one of the schemes – the custodial scheme is free; the alternatives require an insurance premium to be paid.
  2. Not to take a deposit, or as some have suggested, take 2 month’s rent in advance. But taking money by any other means except rent is classed as a deposit, whatever you may like to call it.
  3. Use one of the deposit insurance schemes now in operation, where an insurance premium is paid (usually by the tenant) in lieu of a deposit, which pays the landlord in the event of loss, leaving the insurance company to pursue the tenant.

Where landlords take a deposit for an Assured Shorthold Tenancy they should bear in mind that they will need very good evidence, if they are to stand any chance of claiming compensation in the event of damage, cleaning or loss of rent.

A good inventory (ideally an independent one) is vital, as also is a rent payment schedule and statement, a schedule of the cost of any works sought from the deposit together with estimates, invoices and receipts (produced by an independent or third party) and photographs.

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The good news for landlords is that, so far, cases coming to court have consistently failed to award damages against landlords that have remedied any breach of the legislation, even though this was done late, before the court hearing. However, these have been county court decisions, so they are not binding legal precedents.

Landlords should not be tempted to rely on these outcomes, as judges may have been lenient in the early days of this legislation – you should make every effort in future to fully comply if you want to save yourself a lot of trouble.

©LandlordZONE All Rights Reserved – never rely totally on these standard answers which apply primarily to England and Wales. Before taking action or not, always do your own research and/or seek professional advice with the full facts of the case and all documents to hand.

Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.
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