Landlords must comply with new tenancy deposit rules

Landlords need to ensure they comply with tougher new tenancy deposit rules which came into effect on 6th April.

If they fail to do so, they could face fines and find it harder to evict tenants.

The new rules are part of the Localism Act, which redefines the way landlords should protect the deposits given to them by their tenants.

Tenancy deposit schemes were originally introduced in 2007. Under that system, landlords had to protect a tenant’s deposit with a registered scheme within 14 days of the tenancy start date.

If they failed to do so, they could be fined up to three times the amount of the deposit.

However, subsequent court cases watered down the effect of the regulations. It meant that if a tenant discovered that his deposit had not been placed with a scheme, the landlord could sometimes avoid penalties by rectifying the mistake before the court hearing took place.

The new rules take away that safety net. The landlord can no longer expect to escape punishment by complying retrospectively.

The tenant can bring a claim from day 31 onwards if the conditions have not been met so there is no time to waste.

Landlords should also realise that they can’t rely on Section 21 notices to evict tenants if they fail to comply with the tenancy deposit scheme requirements.

The one good piece of news for landlords is that they now have 30 days to protect a deposit for a tenancy begun after 6th April this year instead of just 14 days as required under the original system.

The deadline for compliance for tenancies begun before 6th April is 6th May. Landlords who fail to comply by that date run the risk of penalties and should act as quickly as possible to protect themselves.

Please contact Eugene Pritchard or Matthew Melling if you would like more information about the issues raised in this article or any aspect of commercial property law.