Tenancy deposit law

Staying on the right side of tenancy deposit law

Letting agents must have a thorough understanding of tenancy deposit law to ensure their landlords are protected against the risks of non-compliance.

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Since 2007, it has been a legal requirement for landlords who rent properties on assured shorthold tenancies to place tenants' deposits in a registered tenant deposit protection (TDP) within 30 days of receiving it. Tenancy deposits also need to be returned to tenants within 10 days of the end of the tenancy, except in instances where there is a dispute. 

Agents appointed by landlords should follow the same rules to avoid putting the landlords on the wrong side of the law.

Under the Tenant Fees Act, the rules around deposit amounts have been tightened further and there’s also a raft of information letting agents and landlords are legally obliged to share with tenants. Failure to comply can be costly.

What information do you need to share with tenants?

Within 30 days of receiving a deposit you need to tell your tenants in writing:

  • the address of the rented property as well as the landlord or letting agent’s name and contact details
  • the amount of the deposit they’ve paid
  •  which tenant deposit protection scheme you’ve selected (there are three government-approved options) and its dispute resolution service
  •  the circumstances under which you might retain some of the deposit at the end of the tenancy
  • how to apply to get their deposit back at the end of the tenancy
  • what to do if there’s a dispute over the amount of deposit returned.

You will only be compliant with the tenancy deposit protection law once you’ve informed tenants of all these things within the allotted time-frame.

What are the caps on deposits?

Under the Tenant Fees Act, the amount that can be held in the deposit has also been regulated. Deposits have now been capped at five weeks’ rent where annual rent is less than £50,000, and six weeks’ where the annual rent is more than £50,000. Holding deposits have been capped at one week’s rent.

What are the consequences for non-compliance?

In addition to being liable to pay back the deposit in full, landlords who fail to comply with the tenancy deposit law can be subject to a hefty fine of up to three times’ the amount of the original deposit. 

More significantly, you can’t serve a Section 21 eviction notice if a deposit is unprotected or a tenant hasn’t been given the appropriate written information about it.

About the author

Fixflo
Fixflo offers smart, web-based software for residential and commercial property professionals. Fixflo Lettings, an award-winning repair and maintenance system, makes managing repairs for rental properties easy for letting agents, landlords, tenants and even contractors.
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