Most landlords are aware that rent deposits for Assured Shorthold Tenancies (‘ASTs’) should be protected; however, there is still a lot of confusion about what is required. Myths abound following a run of court cases but uncertainty has largely been resolved by the introduction of the Localism Act 2011.
To summarise, the consequences of non-compliance can be serious, yet compliance is very straightforward.
Many landlords also don’t appreciate it is as important to provide prescribed information about the deposit to the tenant within 30 days of receiving the deposit.
The current position is:
- The landlord (or his agent) must protect the tenant’s deposit within 30 days of receipt with a registered scheme. A deposit is any sum of money held against a breach of the tenancy, so may include “last month’s rent”.
- The landlord (or agent) must provide prescribed information within 30 days, and comply with the “initial requirements” of the scheme.
If the landlord does not comply with the statutory requirements, any section 21 notice (to quit) will not be valid and the tenant can make a claim for a “penalty” of between 1-3 times the deposit (plus the deposit).
In order to serve a valid section 21 notice, the landlord will have to repay the deposit to the tenant (minus “agreed” reductions), unless the deposit has already been subject to proceedings. If the landlord protects the deposit late, then the court may take this into consideration if and when deciding how much of a penalty the landlord should pay. Late protection will not be a defence to a claim for a penalty or make a section 21 notice valid. In addition, if the landlord is seeking possession because the rent is in arrears, failure to comply will provide the tenant with a counterclaim.
Protecting the deposit could not be easier; it’s free, you will receive all the guidance you need and the schemes provide an arbitration scheme for deposit disputes.
Some agents have their own registered schemes, otherwise the landlord can use -
What’s not to like?