When a landlord receives a deposit from a tenant, they have 30 days (it used to be 14) to register the deposit. This must be in one of the government-approved Tenancy Deposit Protection Schemes.
Once the deposit has been received landlords must tell tenants:
- The address of the property.
- How much deposit has been paid.
- How the deposit is protected.
- The name and contact details of the Tenancy Deposit Protection Scheme and its dispute resolution service.
- Their (or the letting agency’s) name and contact details.
- The name and contact details of any third party that has paid the deposit.
- Why they would keep some or all of the deposit.
- How to apply to get the deposit back.
- What to do if you cannot get hold of the landlord at the end of the tenancy
- What to do if there’s a dispute over the deposit
It’s incredibly easy for tenants to search online to check if their deposit is protected. If the landlord has failed to comply with their obligations, the court can compensate the tenant for 1-3 times their deposit plus the return of the deposit. This is, of course, a significant financial burden on landlords. As a result, it leaves them with little recourse to recover losses arising from a breach of the tenancy by withholding the deposit.
Whilst it is rare that landlords fail entirely to protect deposits, we often see minor technical issues with the prescribed information. Also, delays in the protection or service of the prescribed information. It’s imperative that landlords understand the requirements of a particular scheme and comply. Proof of service of the prescribed information is also important, something we often see challenged by tenants.
What can a landlord do if they have failed to comply with the regulations?
If a landlord has failed entirely to register the deposit or was late in registering the deposit, then returning the deposit in full to the tenant is the only way landlords can rectify the position to enable them to serve a Section 21 Notice. If, however, there is an issue with the prescribed information then this can be corrected by re-serving the correct information. Either way, the landlord is potentially liable for considerable financial compensation to the tenant.
In the event a landlord discovers they are in breach, we would encourage them to negotiate with their tenants. This would be to agree on the amount of compensation payable and avoid court proceedings. Landlords should consider if the tenant is in breach of the tenancy and look to offset any losses against the amount owed. Any agreement should then be wrapped up in a well-drafted settlement agreement.
If you have any questions about deposit protection or are concerned that you may have failed to comply with the regulations, then please feel free to contact the team at Woodstock Legal Services and we will be happy to help you.
