Policymakers have introduced new legislation to protect tenant deposits across the UK, but some landlords are still getting it wrong. A recent article by NLA adviser Alan Jakeway explains how landlords can get it right:

What should landlords do with their tenants’ deposits?
Legislation protecting tenant deposits – which came into force in England and Wales in 2007 – requires landlords to protect any deposit via an authorised tenancy deposit scheme, such as mydeposits, the Tenancy Deposit Scheme (TDS) and the Deposit Protection Service (DPS). These schemes come in two forms: insurance-based, where the landlord registers the deposit with the scheme and then holds on to the money themselves; or custodial, where the scheme is responsible for holding on to the deposit until the tenancy ends.

This legislation was brought in to protect tenants. Is it also good for landlords?
It means that someone else is involved, so landlords should have someone to adjudicate if ever there’s an issue. Saying that, landlords have complained that some schemes feel biased towards tenants, but if the landlord has a thorough inventory when the tenants move in and out, that shouldn’t happen and it should be plain sailing. The scheme title also gives a clue. It protects tenants’ deposits if a landlord uses an agent that takes and holds the deposit. Be sure to choose an agent that holds client money protection.

What do landlords get wrong?
The biggest issue is that landlords don’t register the deposit within 30 days or send the prescribed information. If landlords take a deposit, they must use a scheme and follow its rules, or risk falling foul of legislation.

What are the consequences?
If a landlord hasn’t carried out certain procedures correctly, it will affect their rights to repossess a property. And whereas things like energy-performance certificates can be rectified at a later date, that’s not the case with deposits. So, if a landlord wants to go down the possession route and hasn’t used a deposit scheme, they have to pay the tenant their deposit back. This will alert the tenant to their error and potentially lead to the landlord being taken to court and fined up to three times the amount of the deposit.

If a landlord is unsure they’ve followed procedures correctly, what should they do?
Look at the deposit scheme they’ve used and make sure they’re up to speed with the requirements.

Members of the NLA can call their free advice line:
www.landlords.org.uk/about-nla/tenancy-deposit-protection