Wednesday, 22 April 2015

Landlords to register deposits or risk facing a fine

Buy-to-let investors have until the 23rd June to register for an official deposit scheme or face a fine of £3,600. Thousands of landlords could face a penalty if they fail to register their tenants deposits. This warning comes as the government runs a 90 day amnesty for buy-to-let investors who have not put theirs tenants deposits into an official scheme.

If a landlord fails to register by the 23rd June, the fine will be unlimited. The fine is calculated by tripling the initial deposit. The average initial tenant deposit is £1,200. Despite legislation enforced in 2007, it is estimated that around 1 in 3 of the 1.5 million private landlords in England and Wales, are not registered with a deposit protection service.

It is important to note however that not all landlords fall under this scope of legislation. For instance, arrangements which are different to a tenancy, including lodgers and university lets are excluded. All landlords which have an 'assured short hold tenancy' agreement must register with a government backed scheme.

As well as potentially receiving a penalty fare due to a failure to register, landlords will also face being powerless if the tenant wishes to leave at the end of their contract. This is also the case if the tenant wished to raise a dispute with the landlord.

Introduced in April 2007, deposit protection was set up as a compulsory scheme eight years ago to mediate disputes at the end of the tenancy.

Richard Lambert of the National Landlords Association has suggested that "there are now a large number of deposits that need protecting despite not previously needing to be, and it’s likely that many landlords won’t even be aware of what they need to do". In addition to this, he has also highlighted that "landlords who still hold a deposit should protect it if they haven't already done so, which will ensure that you can legally regain possession of a property [if you need to]." 

Do I need to register with a deposit scheme?

Buy-to-let properties which have an 'assured short hold tenancy' contract in place should have the tenants deposit protected within a government approved scheme. There are however certain exceptions such as a university hall of residence or a lodger renting a room in the landlord's home.

Landlords have 30 days from receiving the deposit to register it with one of the following:
  • Deposit Protection Service
  • MyDeposits
  • Tenancy Deposit Scheme
In the case of a dispute between landlord and tenant, the deposit will be protected in the scheme until the issue is sorted out.

No comments:

Post a Comment