'Forced-to-let' landlords face hefty fines

Published by Jon Land for 24dash.com in Housing

Homeowners who are turning to the rental market in droves in frustration at failing to sell their houses may not be up to speed on deposit protection legislation, The Deposit Protection Service warns today.

The DPS wants to make sure these so-called ‘forced to let’ landlords do not leave themselves open to hefty fines because they are unaware of tenancy deposit legislation.

Under the legislation, introduced in April 2007, landlords can no longer keep their tenants’ deposits ‘in their back pocket’. They must ensure that they are properly protected by a third party, such as the Government-approved DPS.

Kevin Firth, Director of the DPS, said: “Many of these new landlords did not intend to turn to the buy-to-let market.

“With this in mind, we are concerned that they have not had the same time as traditional landlords to fully research their legal obligations.

“Ignorance is no excuse for breaking the law, and so we are keen to get the message on tenancy deposit legislation to them to make sure they do not leave themselves open to punitive action.”

Last week the Royal Institution of Chartered Surveyors reported that its members were seeing a marked increase in properties being taken off the selling market and put out to rent.

The move comes as the number of mortgage approvals in the UK plummeted as people hold off buying a house amid economic uncertainty.

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.

Since launch, The DPS has already returned in excess of £52 million of deposits, as well as interest payments of more than £655,000.

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.