Landlords could risk facing heavy fines if they fail to protect their tenants’ deposits before an important new deadline on June 23 - that’s the warning from the mydeposits service.
The deadline, which was imposed as part of the Deregulation Act, affects landlords who have existing tenancies that started before Tenancy Deposit Protection was introduced in England and Wales in April 2007.
With an estimated 330,000 existing tenancies affected, landlords are being reminded that they could be face fines of up to three times the deposit amount if they fail to protect their tenant’s deposits and supply the Prescribed Information by the June 23 deadline.
Research figures released by mydeposits, one of the three government approved tenancy deposit protection schemes, suggest that 48 per cent of landlords struggle to keep up with changes in legislation which could exacerbate the issue.
The chief executive of mydeposits, Eddie Hooker, says it is vital agents and landlords keep up with changes. “They must act now and check whether they need to protect any deposits and avoid a fine” he says.
Meanwhile the Association of Residential Letting Agents has joined the chorus of bodies reminding letting agents and landlords of a new deposit deadline arriving next week.
David Cox, ARLA managing director, says his organisation is pleased that “a legislative solution to a loophole in tenancy law that plagued the industry for two years, has finally been addressed through the Deregulation Act 2015.”
He says that in 2007 the Government introduced compulsory tenancy deposit protection as part of the Housing Act 2004, in order to offer a more robust mechanism for mediating disputes at the end of tenancies.
However a 2013 Court of Appeal judgment in Superstrike v Rodrigues ruled that any tenancy which began before April 6 2007 but was renewed or became a statutory periodic after that date was a new tenancy and therefore the deposit had to be re-protected.
“This was of serious detriment to landlords and agents as deposits that had been correctly protected became unlawful through no fault of their own” says Cox.
Now, under the Deregulation Act 2015, this confusion has been addressed.
All deposits received on tenancies which began before April 6 2007 that have since been renewed or become statutory periodic tenancies, must be protected under one of the government authorised Tenancy Deposit Protection schemes - TDS, DPS or MyDeposits.
“Landlords have until the June 23 to comply with this new provision and we urge all agents to check whether their existing tenancy agreements will be affected and to act accordingly. If landlords fail to comply they could be liable for sanctions which include a potential claim by the tenant for compensation of up to three times the amount of the deposit paid and find themselves unable to bring a tenancy to an end through a Section 21 notice” says Cox.