Amongst the many responsibilities of landlords is the necessity to protect your tenant’s deposit in a government-approved tenancy deposit protection (TDP) scheme.
The importance of TDP schemes
The deposit must be placed in a scheme within 30 days of the landlord receiving it. These schemes ensure tenant can get their deposits back. However, this will only happen if they meet the terms of the tenancy agreement, pay the rent and bills, and don’t damage the property.
If a landlord fails to register a deposit with a scheme:
- a court can order the landlord to pay compensation to the tenants of between 1 and 3 times the deposit amount.
- any Section 21 notice (notice for eviction) becomes invalid.
Why landlords should always register a deposit
Failing to register a deposit in a scheme can result in hassle and cost for a landlord.
In one case, the tenants – let’s call them Sam and Kate – hadn’t paid their rent in more than three months. Their landlord – we’re gonna call him John- had tried everything, but the tenants refused to respond to emails or answer the door. John also found that he was unable to even try and evict them. Because he hadn’t registered their deposits under a deposit protection scheme, any Section 21 notice for eviction issued would be invalid.
John therefore needed to refund the full deposit to the tenants. However, Sam and Kate refused to provide their bank details. In the end, after enlisting Rentalist’s help, John was able to resolve the situation. He used postal order sent by registered post to repay their deposits, which then allowed him to go through with a Section 21 notice.
However, Sam and Kate left as soon as they received the deposits, still owing three months of rent.
In the end then, John lost money as he was unable to evict the tenants sooner due to his failure to register them with a scheme.
Meeting the statutory requirements for landlords is very important! Failing to do so can have very costly consequences.
We understand though that meeting these requirements can be confusing and time-consuming. But companies like Rentalist and its sister company Co&Co are here to help, and can guide landlords through this process.
To get more information on deposits, click here.