More time to protect your tenant’s deposit

Eddie Hooker, CEO, my|deposits, looks at what the changes to the Localism Bill will mean for landlords

The Localism Bill changes are set to come into force on the 6 April and it will mean some small changes to the way landlords protect their tenant’s deposit.

The good news is that that the changes will give landlords more time to protect the deposit money, but if you don’t do so, the courts will have more powers to impose penalties.

These changes only affect tenancy deposit protection in England and Wales.

Extra time to protect deposits:

  • Currently: Landlords have 14 days to protect the deposit after taking it from the tenant.
  • From 6 April 2012: Landlords will have 30 days to protect the deposit after taking it from their tenant.

Landlords must not only remember to protect the deposit within the 30 days but also provide the tenant with the deposit protection certificate and the Information for Tenants leaflet.  We’ll provide this to you when the deposit is protected but it’s up to you to pass it on to the tenant.

my|deposits will still accept the late protection of deposits by landlords after the 30 day period.  But remember that the tenant can still seek compensation through the courts.  They can do this even if you protect it before going to court.  They can also make a claim after they have left the property.

What if the deposit is not protected?:

  • Currently: Under the existing law, if the deposit is not protected, a court can order that the landlord pay the tenant three times the deposit as a penalty. The landlord is also unable to use a Section 21 notice to seek possession of the property.  There have been some cases where landlords have escaped penalty by protecting the deposit late.
  • From April 2012: If the deposit is not protected within 30 days then the landlord is certain to face penalties if taken to court by the tenant.  Courts will order that the deposit be either protected immediately or returned in full to the tenant.  As a penalty, landlords could also be ordered to pay the tenant between one and three times the deposit amount, and it won’t be possible to use a Section 21 notice until the penalty is settled with the tenant.  Importantly, the tenant can still seek this compensation even if the deposit is protected late or if they have left the property.

Landlords using us to protect their deposits can rest assured they comply with the new law.  Just remember to protect all deposits within 30 days of receiving them and provide the tenant with their Deposit Protection Certificate and the Information for Tenants leaflet.

For more information on how to protect your tenant’s deposit, download our guide here.  Or to join my|deposits and start protecting deposits right now, visit our website www.mydeposits.co.uk

Deposit protection will be introduced in Scotland this year, and more information can be found at www.mydepositsscotland.co.uk

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