Propertymark says letting agents should be aware of the financial implications of failing to deregister tenant deposits.
This kind of failure after is the most common cause of accounting discrepancies among Propertymark’s membership.
A recent routine check of members’ client accounts found 26 per cent of those scrutinised had discrepancies relating to deposits that had been returned to tenants, but not deregistered.
The biggest was £800,000 which would have meant the agency paying almost £5,000 in unnecessary protection fees.
The Tenancy Deposit Scheme says around 20 per cent of all the registrations it invoices agents for every year end up being for already returned deposits.
David Oliver, Compliance Manager at Propertymark, says: “It has been a legal requirement for tenant deposits to be registered with a government-approved scheme since 2007, so it is baffling that there are some agents for whom deregistering them is still not ingrained in the process of ending a tenancy.
“Letting agents have almost 200 pieces of legislation to contend with, not to mention a conveyor belt of day-to-day issues with the properties on their books. Deregistering a deposit is not a legal requirement so perhaps it is not surprising it can slip down the to-do list or off it altogether.
“Agencies are invoiced annually by their protection scheme based on the number of registrations and with larger agencies holding deposits totalling tens of thousands of pounds, the potential financial implications are clear.
“Propertymark’s compliance team carry out regular sample checks in addition to the accounting rules and regulations that members are expected to follow.
“We advise all members to instil deregistering deposits into the process of concluding a tenancy, not only as good housekeeping but also to avoid unnecessary costs if the discrepancies are not picked up before they pay their annual protection fees.”