There have been numerous of times where I have faced Landlords who require help in evicting a tenant to find they are not actually part of a Tenancy Deposit Scheme. When determining why this is the case; the general response I tend to receive is “I didn’t think it was important”.
So why is the Tenancy Deposit Scheme important?
Prior to this scheme there were well-known concerns that Landlords were, without sufficient reason holding onto a tenants deposit once the tenancy had expired. This led to many tenants being mistreated and unfairly losing out on their deposit. For that reason legislation was put into place to safeguard deposits paid under an assured shorthold tenancy agreement.
So, in answering the question why the Tenancy Deposit Scheme is important; the simple answer is – because it is the Law.
I cannot express how many times I have come across Landlords who have formed the false assumption that failing to comply with the Tenancy Deposit Scheme is just a minor omission which they will not be penalised for. It is then I have to advise the client this simply is not the case; especially in circumstances where they would like to evict a tenant out of their property.
I would point out that regardless of whether a Landlord has complied with the correct notice requirements, the first question any Judge will ask a Landlord is whether or not they have complied with the scheme.
Before I go further in to this, you may be wondering about those Landlords who do not manage their own lettings. As you will probably already be aware it is extremely common for Landlords to instruct Agents to act on their behalf. So when I am faced with the reason “It was my agent who didn’t protect the deposit, not me”, you would expect me to advice the client that liability falls back on to the agent. However again, this isn’t the case.
All Landlords are still responsible even if the omission was done by their Agent. In these circumstances the Landlord and Agent will be classed as jointly and severally liable. So for any Landlord reading this article, my advice would be to check any potential Agent’s policies and procedures before instructing them. In other words choose your Agent wisely!
So what will happen if the Judge is aware the Landlord or their Agent did not comply with the scheme?
The Judge can order a penalty which can be up to three times the deposit value. For example if the deposit in question was £600.00 the Landlord can be ordered to pay back to the tenant £1,800.00.
I have also come across situations where the deposit sums were much larger as property values were higher which meant Landlords were paying up to £30,000.00 back to the tenant!
I must point out the utter shock on a Landlord’s face when he or she are faced with a penalty is enough to illustrate that it simply is not worth it! Landlords in these sorts of circumstances end up completely regretting not complying with the Tenancy Deposit Scheme.
So, what is the correct way to secure a tenants deposit?
Within 30 days of obtaining the deposit, you must ensure you do the following;
- Join an approved Tenancy Deposit Scheme – which can be one of the following: Deposit Protection Service, My Deposits and Tenancy Deposit Scheme.
- Provide the tenant with the correct “Prescribed Information”.
- Provide the tenant with the relevant schemes’ information booklet
Following these three steps will not only make you a compliant Landlord, but will also save you a lot of unnecessary stress should you need to evict a tenant.
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