Approved Deposit Schemes
Landlords who fail to secure a tenant’s deposit with one of the approved deposit schemes will find themselves without much recourse if they are forced to go to court for possession. While there was once some leeway, the courts will now come down hard on landlords. Under the old rules, as long as a landlord secured it timely, even if late, the courts did little to punish the landlord’s loose compliance with the rules. No longer.
The rules state all AST deposits must be secured within 30 days of receipt from the tenant. Landlords must then provide the tenant confirmation and details of the protection scheme used. Upon reaching the end of the tenancy, the landlord must notify the tenant should he or she claim any portion of the deposit. These are the rules and landlords can no longer simply disregard them.
The penalty for non-compliance, in terms of recovering your property, are significant. First, the landlord loses the right to use a section 21 notice for possession. The section 21 notice is the preferred instrument for landlords as it requires no ‘cause’ for possession. In other words, if you fail to secure the deposit timely and provide the required information, you will only be able to recover if the tenant decides to leave or by serving a section 8 notice with cause and convince the judge that possession is the proper remedy.
With the housing situation as it is with high rents and short supply, this might not be such an easy task, even with disruptive or non-compliant tenants.
In addition, tenants can apply for an order requiring the deposit to be secured or the information provided, and it can order the landlord to repay up to three times the deposit to the tenant. This is a severe penalty for trying to dodge the scheme. Not only will you lose a significant amount in fines and legal fees, but you may end up with a tenant you can’t get rid of.
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