Private landlords 'defying tenant deposit protection laws'

Nearly two thirds of private landlords are breaking the law by failing to properly protect their tenants’ deposits, new research has revealed.

A survey by The Deposit Protection Service (The DPS) found 62 per cent of landlords willing to admit openly to prospective tenants that they were not registered with any deposit protection scheme – as required by law.

The survey reveals that not only is tenants’ money being put at risk; landlords are also leaving themselves open to hefty fines.

After collating evidence based on interviewing hundreds of landlords from across England and Wales, The DPS found 62 per cent of landlords had not registered their deposits, 18 per cent were registered with The DPS, 14 per cent with other schemes – and amazingly six per cent did not know!

The DPS carried out the survey after hearing mounting anecdotal evidence that landlords were continuing to keep the deposits “in their back pockets” despite it being a clear breach of the law.

Since April 6 2007, every deposit-taking landlord and letting agent in England has to use one of two tenancy deposit protection methods: a custodial or insurance based scheme, for any new or updated tenancies.

Kevin Firth, Client Services Director for The DPS, said: “These figures are staggering. What is particularly shocking is that when asked, landlords were willing to openly admit that they were flouting the law, either by design or through ignorance.

“Fifteen months after legislation was introduced, there is no excuse for failing to properly protect your tenants’ deposits.

“Landlords need to understand that failing to register a deposit is quite simply an unlawful act. There are no two ways about it, and ignorance is no defence.”

The DPS works by holding a tenant’s deposit, free of charge, for the term of the tenancy agreement. At the end of the rental period, the deposit, and a portion of the interest it has accumulated, is paid back to whoever is entitled to it. The remaining interest is used to fund the service.

The DPS has already returned interest payments of more than £450,000 following the end of tenancies.

Under the legislation, landlords who fail to register a deposit face being fined up to three times the value of the deposit and losing their eviction rights.

The DPS sends confirmation of a protected deposit direct to a tenant. If tenants are unsure if their deposit is protected they should ask their landlord for evidence.

The DPS interviewed 229 landlords from across England and Wales.