As from April 6th there have been some changes to the way the Tenancy Deposit Scheme works. These changes are important for both landlords and tenants.
(These changes aren’t relevant to Scotland – click here for information on Scotland’s new tenancy deposit regulations)
Why have the changes been made?
Since the legislation was introduced in 2007 there have been a few significant cases that have highlighted loopholes in the legislation. The new changes aim to close these loopholes.
There have been several changes to the legislation. The most significant being:
- Extending the time limit for protecting deposits (and providing the tenant with the prescribed information) from 14 days to 30
- Changing the penalty for non-compliance from 3 times the amount of the deposit to between 1 and 3 times the amount. This allows courts more discretion when deciding penalties
- Clarifying that penalties still apply even if a landlord complies after the deadline
When do the changes take effect?
They already have – the new legislation came into force on April 6th 2012
What about existing tenancies?
In cases where deposits aren’t protected landlords have a 30 day window to comply. If not they become subject to the full range of penalties. The 30 day window means the deadline is May 5th.
Don’t forget, the legislation only applies to Assured Shorthold Tenancies (ASTs). If you have a lodger, for example, the rules don’t apply to you.
What happens if I don’t comply?
If you don’t comply with the legislation:
- Legal proceedings can be instigated and a fine of up to 3 times the amount of the deposit can be handed out
- A section 21 notice can’t be relied on so it may be difficult to evict your tenant(s)
- The tenancy becomes an Assured Tenancy
In a nutshell
- Landlords now have more time to protect deposits and provide tenants with the information required
- Compliance after the deadline doesn’t exempt landlords from being penalised
- The amount of penalty charge is now more flexible to allow courts discretion
- Landlords have a 30 day window to comply if they’re holding existing, unprotected deposits