Landlords risk penalties, as research suggests 15% are not protecting deposits

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Research commissioned by money.co.uk and carried out by the Centre for Economics and Business Research (Cebr) has suggested that nearly 300,000 landlords have not protected an estimated £514million of tenants’ deposits. These tenants without protection are vulnerable to unfair losses when they move out.

This research does, however, need to be treated with caution as there is a lack of accurate data on:

  • How many assured shorthold tenancies exist in England and Wales;
  • How many of these tenancies have deposits attached to them.

However anecdotal data does suggest that there remain landlords who either do not know that deposits need to be protected or who deliberately fail to comply with the legal requirement to protect deposits.

What if the landlord or agent does not comply?

The Tenancy Deposit Protection (TDP) legislation came into force on the 6 April 2007 as part of the Housing Act 2004. The TDP legislation was amended by the Localism Act 2011 and then further amendments were included in the Deregulation Act 2015. A landlord or the letting agent acting on their behalf must comply with the requirements of the TDP legislation and protect tenancy deposits with an authorised scheme and issue prescribed information to the tenants. If they don’t do so correctly, then the tenants (or the person who paid the deposit on behalf of the tenants) can ask the Courts to consider whether there has been a breach of the TDP legislation to protect the tenancy deposit.

This legislation applies to all Assured Shorthold Tenancies in England and Wales where a deposit is taken, and the Court can order the landlord or the letting agent to repay a tenancy deposit with or without deduction.

The Court can also order the landlord to pay a penalty of between one and three times the amount of the deposit. This could mean a penalty of over £3000 with an average deposit value of £1040 plus the return of the deposit.

Northern Ireland and Scotland have slightly different rules but work in broadly the same way.

A landlord who has not correctly protected a deposit may also find that they cannot rely on a notice to end the tenancy and regain possession of the property under section 21 of the Housing Act 1988.

Is my deposit protected?

If you're renting from a private landlord with an assured shorthold tenancy your deposit should be protected in a scheme such as ours.

At the Tenancy Deposit Scheme we protect over a million deposits from being lost or unfairly withheld from tenants.

Tenants can check if their deposit is registered with TDS by using the Is my deposit protected? checker.


Posted by on 3 February 2016

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