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Complaints Over Tenancy Deposits Increase

Complaints Over Tenancy Deposits Increase

Homeless charity Shelter is urging private sector rental tenants to make sure their deposits are protected, having seen calls regarding deposit protection issues rise by 80% in the last two years.

According to the homeless charity, the average deposit for a privately rented residential property currently stands at £979 (GBP), meaning that if a deposit is withheld at the end of a tenancy, people will be pushed into debt, or even have difficulty securing to a new home.

Landlords who fail to place their tenants’ deposits in one of three authorised schemes within 30 days will face prosecution but it seems many tenants are unaware of the new deadline, leaving some landlords free to flout the law.

Shelter’s chief executive, Campbell Robb, commented: “It is extremely worrying that we have seen such a huge rise in problems with tenancy deposits at a time when privately renting is no longer just a stepping stone to something better, but a long term reality for more and more families.”

Landlords who don’t protect tenants’ deposits can face a penalty of one to three times the full value of the deposit, which will then be awarded to the tenant.

UK Landlords have been warned not to become complacent by the Tenancy Deposit Scheme (TDS) ahead of the deposit regulation changes due at the beginning of April.

The new legal requirements for deposit protection allow a 30-day period to supply proof of deposit registration to the tenant instead of 14 days as from 6th April 2012.

The new tenancy deposit regulations state that the landlord can be sued on Day 31 for up to three times the value of the deposit provided by the tenant at the start of their tenancy, if the deposit has not been registered with one of the three official Government run deposit schemes or if the prescribed information has not been provided.

The TDS have summarised the changes and have also issued plain English answers to all the important questions brought forward by the changes due when the new Localism Act comes into force, including retrospective changes, penalties for missing the new deadlines, renewals, relevant persons and what happens with running tenancies.

Steve Harriott, TDS chief executive said: “The new provisions for tenancy deposit protection are welcome. But the extra time for registration is not a licence for landlords and agents to ignore the law. It means that the anomalies in the original Act have now been straightened out to everyone’s benefit.”

The TDS plain English answers to the new provisions for deposit protection can be found at: www.tds.gb.com

Legal Update by Legal 4 LandlordsFollowing a recent High Court decision the new defence to a Section 21 Notice is none compliance with The Housing (Tenancy Deposits) (Prescribed Information) Order 2007

The decision in Suurpere-v-Nice (2011) confirms that the prescribed information must be complied with and if this is not done landlords could be subject to sanction when before the Courts

The Sanctions

  • If a possession claim subject to section 21 of the Housing Act 1988 is issued without the information being properly provided and served, the section 21 notice will be invalid and the claim could be struck out.
  • A counter claim can be made, and if the prescribed information has not been provided or if the deposit was not registered, the Court may award 3 times the deposit.
  • Ultimately the deposit protection is the responsibility of the landlord and as managing agents you have a duty to comply with the regulation on behalf of the landlord.

What is “Prescribed Information”?

• The minimum information required by statute that is to be given to the tenant on registration of the deposit. This must be as a separate certificate and signed by the landlord and tenant and not part of the tenancy agreement.

• This must be a certificate and it must be sent to the tenant with the proof that the deposit has been registered together with any information provided by the individual deposit scheme.

Download our Fact Sheet on Deposit Law Issues and Latest Case Law Updates and Clarifications

Tenancy Deposits Increase

PRS Tenancy Deposits Increase

The average tenancy deposit for a residential property in the UK’s private rented sector (PRS) has increased by £125 in the past year, up from £985 to £1,110.

When letting property, Buy-To-Let Landlords and letting agents in London demand the highest deposits from would be tenants (£1,495), while the average PRS residential deposits were lowest in the Yorkshire and Humber area (£568).

With rents continuing to rise, landlords and agents are understandably taking larger deposits towards protecting their property investments, however, Landlords have been required to place the tenants’ deposit with one of the 3 Government approved tenancy deposit schemes since April 2007.

Landlords would prefer to collect the equivalent of up to 2 months rent as the deposit for their property, however this is beyond the finances of most tenants and requesting a high deposit can actually put off suitable tenants who simply haven’t got the ready cash but who do earn enough to afford the rent.

The increase in the Assured Short-hold Tenancy (AST) threshold, with tenancies up to £100,000 per annum now requiring deposit protection, has increased the number private rented sector properties this applies to and so increased the number of tenancies requiring deposit protection.

*Average deposit required for PRS residential property (England and Wales)

  • East Midlands: £916
  • East of England: £961
  • London: £1494
  • North-East: £665
  • North-West: £693
  • South-East: £1069
  • South-West: £702
  • West Midlands: £781
  • Yorkshire & Humber: £568
  • Wales: £747

*Data: mydeposits

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