As the New Year gets underway and landlords start to let their properties to those tenants looking for a new start, most landlords recognise the importance of asking for a deposit from their new tenants, so that any damages can be rectified or arrears of rent cleared once the tenants leave.
But what most landlords may not realise is the importance of placing those deposits within one of the three authorised deposit schemes, namely the Deposit Protection Service, MyDeposits or the Tenancy Deposit Scheme.
Failure to do this swiftly and to serve the necessary information upon your tenants, could put their deposit and also your own hard earned cash in jeopardy. The law dictates that any tenant whose landlord has not complied with the legislation can issue a claim against their landlord – for not only the return of that deposit, but also a “penalty”, which could be up to three times the value of the deposit!
There is usually little defence for the landlord if your tenants decide to take this action. So, for example, if you take a £500 deposit from your tenants, then fail to register it or fail to send them the necessary information, and you could find yourself having to pay a £2,000 penalty to them!
There remain numerous ‘investors’ who may have purchased an extra property as a small investment or nest egg to rent out, who still do not know about this legislation – and may be putting themselves in jeopardy. So don’t put yourself in that position, register the deposit as soon as you get it and serve the information upon the tenants too. Simple!
Remember, this applies to all rented properties where a deposit is received and student lets too, so make sure you don’t leave yourself open to such a claim by not knowing the law – that line of defence unfortunately won’t help you in court.
For further information on landlord and tenant issues, please contact our Dispute Resolution team on 0161 475 7676.