Why you must protect your tenant’s deposit?

The Tenancy Deposit Scheme may be old news…

It’s nothing new so there’s no excuse: Tenancy Deposit Schemes have been a legal requirement since the Housing Act of 2004, and only the most unobservant landlords can claim ignorance.

Yet it’s still easy to forget: you have 30 days to protect your tenant’s deposit in an approved scheme and notify them that this has been done, yet it can still be so easy to miss deadlines.

But elephant traps over tenancy deposits still exist

One potential elephant trap is that the clock starts ticking from the date you receive the deposit, not the date the tenancy commences. Make sure you plug this date into your online calendar and set a few email reminders to be triggered.

What happens if you haven’t protected your tenant’s deposit?

So you haven’t protected your tenant’s deposit in a timely manner?

Let’s look at what this could mean.

1. Your hands are now tied.
   You cannot now legally repossess your property where there is ‘no fault’ at the end of the tenancy using a Section 21 notice (Notice of Possession). This means there will be a lot more hoops to jump through and hurdles to overcome.
2. You could lose the deposit.
   Your tenant may make an application to the Court to seek a return of the deposit. If you are at fault this is most likely to be granted, leaving you with no security against damage or unpaid rents.
3. You could be left out of pocket.
   The Court can actually instruct you to pay the tenant treble the deposit amount as a sanction against your failure to comply.

Here are some workarounds

The truth is there simply is no excuse for not complying and you have laid yourself open for prosecution and, perhaps, a fine.

There are three possible workarounds open to you.

First, you can return the deposit to your tenant. Be honest: tell them you have made a mistake and return their deposit in full. Of course, you are left without a security deposit but you can now serve a valid section 21 notice should you need to.

Second, you could simply take what’s coming. If your tenant has made a claim you can just see it through, take the hit and, once the Court has made its decision, you can once again serve that notice legally.

Finally, you can ask your tenant to surrender the tenancy, return their deposit and start a new agreement with them all over again. You never know, some folks are very obliging!

Here’s to letting without fretting

The simplest way to avoid any of this is to not let it happen in the first place. Tie a knot in your hanky, set up an email reminder or, better still, avoid all the hassles of tenants and lettings, but still make money from your properties, by chatting to me about our Rent Guarantee Scheme . It gives you guaranteed rent and a guarantee of never having to personally deal with all this trouble ever again.

Now that’s letting without the fretting.