Back to basics – Landlords MUST protect deposits

The Tenant Fees Act 2019 came into force on 1^st June 2019 and provided more rules regulating tenancy deposits.

The new rules undoubtedly provide a new hurdle for landlords, but it’s important that landlords continue to work to get the basics right. We have found that despite it being many years since the law changed in relation to the protection of deposits, some landlords are still failing to protect their tenants’ deposits and are now facing disastrous consequences as a result.

Deposits must either be paid into an authorised scheme or be registered and insured with such a scheme. These schemes are known as Tenancy Deposit Schemes (TDSs) and became compulsory for all residential Assured Shorthold Tenancies (ASTs) created on or after 6 April 2007 and were created under the Housing Act 2004.

The purpose of TDSs is that they are intended to prevent a landlord from failing to return a tenant’s deposit and to ensure a landlord is not left out of pocket when a tenancy expires and a tenant leaves the property. The parties to the AST cannot contract out of the above obligation.

If a landlord fails to join a TDS, they will be liable to financial penalties and are likely to be prevented from recovering possession of their property from the tenant. If the deposit protection regulations are not complied with fully, it may invalidate any Notice Requiring Possession (a s21 Notice) already served and prevent them from serving a valid s21 Notice until rectifying action is taken.

Landlords are also obliged to give tenants full written details, including the scheme reference number which is known as the Prescribed Information. The landlord must give the tenant the Prescribed Information within 30 days of receipt of the deposit. Failure to serve the prescribed information means that the landlord cannot serve a valid S21 on the tenant, and the tenant could ask the court to make the landlord pay a penalty up to three times the amount of the deposit.

For further advice on any aspect of residential property law, please contact either Janice Young or Holly Baker.