New law leaves landlords risking £3000 fines
The government’s pledge to cut the burden imposed by red tape has left landlords who fail to register tenant deposits received more than eight years ago facing fines of up to £3600.
Landlords have until 23 June to protect deposits taken before 6 April 2007 following the introduction of the Deregulation Act last month.
It’s thought up to one in three of the 1.5 million private landlords in England and Wales have yet to register deposits. However, the majority of cases are thought to relate to tenancies that have continued after the original agreement passed.
To encourage landlords to comply with the Deregulation Act, the government is running a 90-day amnesty.
If you’re a landlord with an assured short hold tenancy you must register with one of three government-backed schemes.
Landlords who don’t register will not only face unlimited fines – usually calculated at three times the initial deposit – but will be left powerless if they want a tenant to leave at the end of their contract.
Tenants often put down six weeks rent upfront. The average monthly UK rent is £768, meaning a deposit roughly of £1,152.
In 2007, rents – and therefore deposits – would have been lower but it is still thought the average fine will be around the £3,000 mark. And in London this penalty is likely to be far higher.
Why was the scheme introduced?
The compulsory deposit scheme was set up eight years ago to mediate disputes when tenancies came to an end.
Courts decided that all tenants should have their money protected; this new ‘amnesty’ started on March 26th under the new Deregulation Act and will simplify landlords’ obligations.
How can I register a deposit?
When you receive a deposit you must register within 30 days with the Deposit Protection Service, My Deposits or the Tenancy Deposit Scheme. There are separate schemes in Scotland and Northern Ireland. The first of these is free to use, but landlords won’t have access to the money. My Deposits allows landlords to hang on to the money, but costs up to £24 per deposit and there’s a joining fee of £20.
The Tenancy Deposit Scheme is free to sign up to and allows landlords to keep the deposit; but it costs up to £21.95 to register each deposit.
Here at Assetgrove we take the stress out of these things for you. If you allow us to look after your property, not only do we offer a rent guarantee for up to five years; but we’ll also take all of the inevitable headaches out of the day-to-day business of managing properties, including handling and registering tenant deposits.