Does your deposit have protection?


There are a couple of important changes in the law coming up which current and aspiring landlords need to be aware of from tomorrow.

Currently tenancy deposits taken for all assured shorthold tenancies starting or renewed after April 2007 must be covered by a tenancy deposit protection scheme.

Under the Localism Act which comes into effect on April 6, 2012, the time limits for protecting the deposit and providing the prescribed information to the tenant has been extended from 14 days to 30 days.

The legislation has been reworded to close a loophole regarding the deadline for registering a deposit.

A number of court cases have exposed that landlords were able to escape a fine as long as they registered a deposit before the case got to court.

Now, if a deposit is not protected within 30 days, the tenant can take their landlord or letting agent to court – there is no other way to interpret this legislation. The requirement for providing the prescribed information to the tenant will also be changed to within 30 days of receipt of the deposit.

This is an absolute time limit. A tenant will be able to make a claim from 31 days after deposit payment if the requirements relating to protection and prescribed information are not met.

The claim will be for the return of the full sum of the deposit along with a penalty of between one and three times the sum of the deposit, to be awarded at the discretion of the Court.

If a tenant makes an application to the county court once the tenancy has ended, the landlord will no longer be able to retrospectively protect the deposit in order to comply with the act.

If the tenancy has ended, the only option is for the landlord to repay the deposit, or part thereof, to the tenant.

The changes give the courts discretion to award not less than the amount of the deposit and not more than three times that amount depending on the individual case. For example, a repeat offender may find themselves with a larger fine compared to a landlord who has simply forgotten to protect as an administrative oversight.

There are a number of law firms ready to specialise in taking on these cases and start prosecuting landlords.

The minimum one month’s deposit fine is guaranteed, assuming the landlord or letting agent hasn’t complied with the act within thirty days. The landlord may also have to pay reasonable court costs. Another consequence of the legislation is that a notice to quit (section 21 notice) may not legally be given to a tenant where a deposit has not been protected within the 30 day period. This means you cannot serve notice on the tenant until the deposit is protected.

However, there are certain exceptions to this contained in The Localism Act. The changes in section 184 of the act will not apply to any deposits taken in connection with tenancies that have come to an end before April 6, 2012.

There are also changes to the legislation relating to Energy Performance Certificates (EPCs). Currently anyone selling or renting out a property must obtain an EPC.

The current 28 day period within which an EPC is to be secured using “reasonable efforts” will be reduced to seven days. The written particulars for the property now has to include the full EPC report and not just the “asset rating” which is a bar chart that shows a rating of A to G.

Trading standards officers currently have the power to require the ’relevant person’ (i.e. the seller or landlord) to produce copies of the EPC for inspection and to take copies if necessary.

The power to require the production of documents will be extended to include persons acting on behalf of the seller or landlord – e.g. estate agents and letting agents.

This means that officers will be authorised to require agents to produce evidence showing that an EPC has been commissioned where they are marketing a building without one.

Landlords must make sure they comply with all current legislation when renting a property and the help of a specialised letting agent can be invaluable.