According to Landlord Action, as many as 38% of landlords calling their legal helpline for advice on evicting a tenant have failed to place their tenants’ deposits in a government-recognised scheme within the prescribed 30 days of receiving it. Many have not even heard of the scheme which came into force back in 2007. Landlord Action has launched a deposit service to deal with these cases.
Reviewing enquiries from the start of this year, Landlord Action says there is still a major problem with landlords (and some agents) having very little knowledge of this important piece of legislation.
Landlord Action is seeing an increasing number of landlords facing penalties of up to three times the value of the deposit, which is then awarded to the tenant. The landlords also face penalties if their agent failed to comply with the legislation, which adds tension to the relationship between landlords and their agents.
Paul Shamplina, Founder of Landlord Action says:
“There are too many landlords that still do not know enough about being a landlord and their responsibilities. Many are failing to comply with deposit protection rules and this is having a knock-on effect when landlords wish to evict through Section 21. The simple fact is, ignorance will not solve the problem.”
The only way a landlord can legally evict a tenant who will not move out voluntarily (and who is not in arrears or in breach of their tenancy agreement) is via a court order for possession.
But in order to obtain this, a landlord must first return the deposit. Furthermore, Landlord Action says they are receiving more and more phone calls from desperate landlords who are being sued by their tenants for compensation for not protecting the deposit.
“It seems to me, that tenants are becoming savvier than their landlords when it comes to buy to let legislation. Landlords, this is your business, you must be fully versed in your responsibilities!” adds Mr Shamplina.
According to Landlord Action’s Legal Team, many solicitors are reluctant to take on these cases as there is no defence against it and it is purely down to the judge’s discretion.
In response to the rising number of enquiries with deposit issues, Landlord Action has launched a fixed fee deposit claims mitigation service for landlords, to act on the landlord’s behalf in dealing with the court paperwork and also attempting to reduce the level of penalty the landlord faces.
Eddie Hooker, CEO of MyDeposits, one of the Government approved protection schemes, comments:
“The findings of Landlord Action are somewhat worrying, especially as all three schemes have seen a healthy year on year increase in the number of deposits being protected. Having said that, we should not become complacent and there is clearly more work to be done in ensuring that deposit protection is embraced by the entire private rented sector.”
“Landlords and agents should be aware that protecting the deposit with an authorised scheme is only one part of their legal responsibility. The other requirement is to correctly serve the Prescribed Information to the tenant and this is definitely an area where better understanding of the legislation is needed.”
“The majority of legal cases we see surround the incorrect issuing of the Prescribed Information, or failing to issue it all. All schemes have extensive information on how to comply with the legislation, including timescales on their websites and we urge letting operators to ensure they understand their obligations”.