Since 2007, residential landlords failing to register a deposit taken from the tenant can be fined. Perhaps more seriously, though, they can have problems recovering possession of the property. Here are some of the main points.
The Landlord’s Obligations
Under section 213 of the Housing Act 2004, when a residential tenant pays a deposit for an Assured Shorthold Tenancy, the landlord has thirty days to register it with an authorised tenancy deposit scheme and provide the tenant with the necessary information. Failure to do so may mean the landlord has to pay a fine to the tenant of up to three times the deposit amount.
The legal obligation for this lies with the landlord, not with the agent acting for them, so it’s important to make sure any agent you appoint is carrying out their duty. If they fail to do so and you’re charged a fine, however, you may be able to make a claim against them.
Section 21 Notices
A problem potentially more serious than the fine is that failure to follow the correct procedure within thirty days will make it more difficult to issue a section 21 notice to recover possession of your property. A section 8 notice for a breach in the terms of the tenancy, however, won’t be affected.
If you were late with registering the deposit, the best solution is to return it to the tenant. Since the Act doesn’t allow for late registration of the deposit, returning it is the only option, though if the error was in not providing the necessary information to the tenant, this can be done late.
The deposit must be back in the tenant’s account before a section 21 notice can be issued. If the tenant is unwilling to take the deposit back, the best solution is to send them a cheque, preferably by registered post. If you then leave a reasonable time for the cheque to be cashed, a court is likely to back you in sending the notice.
Potential Problems
Even if you’ve followed the correct procedures, there are a few potential pitfalls. The deposit must be registered for each tenant, so if a new tenant is added, the safest course is to return the deposit and start again. If you’re buying an interest in a rented property, you may be liable for any failing of the previous owner, so it’s important to seek an indemnity.
If you have any problems with recovering possession of your property from tenants, feel from to contact me for a chat.
Blog originally published here.