Deposit Protection for Landlords

Deposit Protection for Landlords

Landlords offered a 90 day Amnesty to register Deposits – or face a hefty fine

Following the implementation of the Deregulation Act on the 26 March 2015, thousands of landlords with long-standing tenants could now face a shock penalty unless they register Deposits by 23 June 2015 at the latest.

When are you required to register a Deposit?

Deposit protection was set up as a compulsory scheme from the 6 April 2007 in a move to help aid mediation in end of tenancy disputes. Following this date all landlords taking tenants on an Assured Shorthold Tenancy (AST) are required to register any Deposit with one of the government-backed schemes within 30 days of receipt. The landlord is also required to serve Prescribed Information on the tenant within the same 30 day period, giving details of the Deposit and where it is to be held. Should the fixed term come to an end and the tenant remain in the property on a periodic basis, the landlord is still required to then reserve the Prescribed Information within the same 30 day deadline of the fixed term having expired.

When introduced in April 2007, it was unclear if landlords with existing tenants would also need to register Deposits where the tenancy had begun before the 6 April 2007. The case of Superstrike Ltd v Marino Rodrigues (2013) confirmed that even where the initial fixed term of the tenancy commenced before 6 April 2007, where the tenant remains in occupation at the end of the fixed term, the resulting tenancy which arises (often a statutory periodic tenancy) amounts to a 'new' tenancy and the landlord would be required to protect the Deposit and reserve the Prescribed Information following 6 April 2007 even where the particulars of the tenancy remained unchanged.

The Court's decision left many landlords in a muddied situation, unaware that they were now required to protect Deposits even if the AST had begun before the 6 April 2007.

The Impact of the Amnesty

The Deregulation Act 2015 enshrines the Superstrike case into law but gives a period of amnesty for landlords and agents who may have been caught out by the case. Landlords now have a 90 day period to register any Deposits paid before 6 April 2007 where the tenancy continues on or after 6 April 2007. The landlord will also have the same 90 period to ensure that the Prescribed Information is served on the tenant.

Therefore, as long as the landlord satisfies these two requirements before the 23 June 2015 it will be treated as though they have always been complaint.

Why should you comply?

Failure to comply in protecting the Deposit and serving the Prescribed Information will place landlords at risk of being subjected to a penalty fine. Fines are unlimited in value and calculated at three times the rate of the initial Deposit. It will also prevent the landlord from serving a valid section 21 Notice Requiring Possession should this be required at the end of the tenancy making it extremely difficult to regain possession of the property.

Ultimately, the Amnesty offers landlords who were paid Deposits before 7 April 2007 and who found themselves left in the muddied situation resulting from the Superstrike decision, a safe route to bring themselves into line with the legislation, provided they protect the Deposit and serve the Prescribed Information before 23 June 2015.

At Clapham & Collinge we have a dedicated team of expert solicitors who can provide you with all of the necessary information, support and legal advice, in relation to buy-to-let investments. Contact us today on 01603 693500 or email