Landlords find out why it is important to be legally compliant
Mon, Sep 02, 2019
When renting out property it is extremely important to take a deposit from your tenant to ensure that any damage at the end of the tenancy is covered. However, taking a deposit comes with legislation aimed at protecting the tenant so you need to make sure you are compliant.
Assured Shorthold Tenancies (ASTs) require landlords to protect a tenant’s deposit with a government approved scheme. A tenant must be issued with paperwork related to their deposit protection, this is known as Prescribed Information. All this must be done within 30 days of receiving the deposit. If you are a live-in landlord sharing accommodation with your tenants, you are not required to protect a deposit.
What happens if I do not protect the deposit?
If you do not protect the deposit (at all or within the 30 day limit), or serve the Prescribed Information, you will be liable to repay the deposit back to the tenant, but also between 1-3 times the deposit amount on top of that. This means if you failed to protect a deposit of £1,000, you could end up paying out £3,000. It is also important to note that you will be unable to serve a Section 21 notice. If you have protected the deposit but later than the 30 day period, you will not be able to serve a Section 21 notice. If you haven’t protected your tenant’s deposit at all, or late, your best option is to return the full deposit and then serve a Section 21 if required. If you do return a deposit for failing to protect it, ensure everything is in writing and signed by your tenants so they cannot dispute that the money has been returned to them at a later date.
As the landlord and owner of the property you are solely responsible for any fines due to failing to protect the deposit correctly. It is extremely important to be legally compliant when taking a deposit from a tenant. If you’re unsure of following the deposit protection steps we would advise using the services of a managing agent, such as Andrew Grant to help you comply with all current legislation – including tenant deposits. We are a member of The Tenancy Deposit Scheme (TDS) and protect the deposit for you, as well as serving the required Prescribed Information.