Fran Mulhall, Regional Operations Manager at GFW Letting, North East property rental specialists, discusses The Deregulation Act 2015 and why landlords must take note.
“The protection of tenant deposits is always a hot topic in the private rented market and something that often causes the greatest amount of disagreement between tenants and landlords. Following a number of high profile court cases where landlords have been challenged by tenants for up to three times the deposit amount and on the enforcement of notices to quit, The Deregulation Act 2015 has been introduced to provide greater clarity on what landlords should and should not do.
Under the Act, which came in to force in March this year, there are a number of key deposit protection changes that landlords need to be aware of. For example, deposits taken before 6 April 2007, where tenancies have continued past the initial tenancy agreement and are still running, now need to be placed in a deposit protection scheme. If the deposit is not protected, landlords will not be able to issue a Section 21 notice to regain possession of a property until the deposit is secured. Landlords have until 23rd June of this year to protect deposits or potentially face a fine. For deposits taken after 6 April 2007, where the tenancy has rolled on or been renewed, then as long as the original deposit is still protected in the same scheme and the tenancy details haven’t changed, there is no legal obligation on the landlord to re-register the deposit.
The new Act provides clarity on the tenancy deposit protection regulations in practice, especially with regard to whether the pre 6th April 2007 deposits fall under the protection rules. The onus is on landlords to adhere to the new rules and ensure they’re compliant.
I think the deposit protection ruling from the Act can only be seen as a positive change, however I think there is a danger of detrimental effects that the Act might unintentionally encourage, relating specifically to the Section 21 notice to quit.
The Deregulation Act has altered the rules regarding serving notice to quit, namely the timing in which the notice can be served and the period of notice required to be given to the tenant. Landlords who had been served with a local authority improvement notice for failing to carry out repairs requested by the tenant within a timeframe could fall foul to the lack of power to serve a Section 21 notice to quit for six months. Though this has been brought in to try to tackle retaliatory evictions, there is licence for this to be abused by dishonest tenants in fabricating repair situations, leaving landlords powerless to do anything.
Any legislative change or new ruling can create confusion for landlords as it is not always straightforward to understand, given the volume of different situations any one given law could be applied to. That’s why it is really important that landlords work with good and knowledgeable agents who can guide them through any new legal changes that might occur.
A good agent should support landlords to ensure their assets and interests are being looked after appropriately. A landlord should feel that they can trust their agent to notify them of any legislation changes as and when they’re made so that they remain compliant and are aware of the latest industry developments.
As with any new legislation, there are always positive aspects and drawbacks but the difference in how legal implications can affect landlords can all depend on the expertise, experience and knowledge of the agents who manage the property. It’s vital therefore that landlords choose agents who provide a quality, transparent service and can guide them correctly through legislation changes such as The Deregulation Act 2015.