Tenancy Deposit Legislation

Tenancy Deposit Protection In April 2007 it became law (Housing Act 2004) that all deposits collected by Landlords or Agents, [even renewing an AST] need to be registered in either a custodial scheme or an insurance based scheme. These schemes protect all deposits on Assured Shorthold Tenancies in England & Wales.

  • As from 1st June 2019 in England Tenancy deposit restricted to no more than five weeks’ rent. ONLY if the annual rent is above £50K per an annum may the deposit be up to 6 weeks -but no greater See PIMS Full Guide to Tenant Fees Act
 
 
The Landlord or person deemed to be holding the Deposit must now comply with the new Deposit protection Laws or face a mandatory fine Legislation revised 2012. Within 30 days of receiving a deposit the Landlord or Agent must lodge the deposit in a scheme or insure it. They must also give the tenant and any other person/entity who provided the deposit, details about how their deposit is protected including:

Penalties for failing to comply

If a Landlord or Agent fails to comply with the deposit legislation they maybe ordered by the courts to return or protect the deposit AND ALSO pay the Tenant NO LESS than one times the value of deposit BUT NO MORE THAN than three times the deposit value, further penalties may include being unable to serve a Section 21 Notice, until the deposit breach has been remedied.

Tenancy Deposit Protection is designed to ensure:

  • Tenants get all or part of their deposit back, when they are entitled to it.
  • Any disputes between Tenants and Landlords or Agents will be easier to resolve.
  • Landlords and Letting Agents who do not protect tenancy deposits may have to pay their Tenant back three times the deposit.
  • Good tip NOW OUT LAWED historically landlords would ask for 6 weeks/ 1.5 months could minimise potential loss when the Tenant withholds the last month's rent -Many Tenants fear their deposit will not be returned and because, in some cases they know that they have caused damage to the property that will result in them losing their deposit. The new laws mean this would now be unlawful and result in a fine
  • As from 1st June 2019 in England Tenancy deposit restricted to no more than five weeks’ rent. ONLY if the annual rent is above £50K per an annum may the deposit be up to 6 weeks -but no greater See PIMS Full Guide to Tenant Fees Act
  • So the message is becareful renewing Tenancies where there is a deposit see PIMS Tips renewing