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Landlords face fine over tenant deposits

Posted on 2015-05-22

Landlords with long-standing tenants who aren’t enrolled in deposit schemes by the summer could face penalties of £3,600. At present, the Government is running a 90-day amnesty for those who haven’t put deposits into an official scheme.

Register by June 23rd

The deadline for these registrations is June 23rd and the potential fines could be substantial. They’re worked out at three times the initial deposit, and the average sum that a tenant puts down is £1,200. The amnesty began on March 26th under the new Deregulation Act, and it’s thought that it’ll help make the obligations of landlords clearer in the long-term.

Currently, estimates suggest that the change could affect up to one in three of Britain’s 2 million or so landlords, in spite of the fact that legislation enforced it back in 2007.

Scottish landlords aren’t covered by the new legislation, but any England or Wales based landlord with an ‘assured short hold tenancy agreement’ is, and must register with one of the three Government-backed schemes. There are certain exceptions to this, such as those in university halls of residence or a lodger renting a room in the house of a landlord.

Long-term landlords most likely to be affected

It’s thought that landlords who have had the same tenant for a number of years are most likely to be ‘caught out’ by the change. This is because, with tenancy agreements simply rolling over, there’s not necessarily a need to use a letting agent and, as a result, you may be unaware of regulation changes.

How do I register a deposit?

From the day a landlord receives a deposit, they have 30 days to register it with the Deposit Protection Service, MyDeposits or the Tenancy Deposit Scheme (there are separate schemes available in Scotland and Northern Ireland).

Each scheme works differently. The Deposit Protection Service is free, but the landlord doesn’t hold the money, so they can’t earn any interest. In contrast, MyDeposits allows the landlord to keep the money, but it costs up to £24 per deposit, with a standard joining fee of £20. Likewise, The Tenancy Deposit Scheme is free to sign up to and costs up to £21.95 per deposit, plus it allows landlords to keep the deposit during the tenancy.

Key Takeaways:

  • Landlords in England and Wales must register for a Government-approved deposit scheme by June 23rd 2015
  • The scheme is estimated to potentially affect one in three landlords across England and Wales
  • If you have a long term tenancy, you’re more likely to be affected as agreements tend to roll over
  • There are three schemes to choose from; each has various terms and associated charges

Image courtesy of Shutterstock

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