If you are new to being a landlord you may not be aware of your strict obligations in relation to tenancy deposits. Pursuant to the Housing Act 2004, if you let your property out under an assured short-hold tenancy starting after 6 April 2007, it is your statutory obligation to register the deposit in one of the government-backed tenancy deposit schemes within 30 days of receipt.
In England and Wales, the three government backed schemes are:
Once you have registered the deposit, you must then disclose the following information to your tenant (also within 30 days of receipt):
Failure to comply with either of the above obligations can lead to legal action being taken against you and the common penalty can be three times the value of the deposit paid by the tenant. Please note that the Court takes a very dim view of landlords who ignore or fail to comply with their tenancy deposit obligations. If for whatever reason you do not comply with the tenancy deposit rules, your tenant will be able to take legal action against you, resulting in either i) being ordered to protect the deposit immediately if the tenancy is still running; or ii) being ordered to return the deposit without deductions if the tenancy has come to an end. In addition, you may also be liable to pay a penalty as mentioned before. The penalty is no less than one times the value of the deposit, and no more than three times the value of the deposit. If the action against you is successful, the Court may also order you to pay the tenant’s legal costs on top of the penalty.
It is therefore very important that you are aware of your statutory obligations under the Housing Act 2004. If you are unsure of any of your obligations, we strongly suggest that you take urgent legal advice. If you would like further advice or assistance from Goldsmith Williams, please contact us using the form on this page.
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