Landlords warned on tenants' deposits

Published by webmaster for Ellesmere Port & Neston Borough Council in Communities

IT will soon be illegal for private landlords to take security deposits off tenants unless they belong to an approved tenancy deposit scheme.

Approved schemes must be either insurance-protected or involve a third party holding the money, and both must offer independent or Alternative Dispute Resolution (ADR) services.

The change comes into force from 6 April*, in response to government consultation that revealed 17% of private rented tenants felt that all or part of their deposit was unfairly withheld when the tenancy ended.

Currently tenants and landlords have to take grievances to the small claims court, which can be lengthy and expensive.

Under the new law, landlords with existing assured short hold tenancies who decide to create a new tenancy agreement at the end of the initial six or 12 months must from that point on make sure the original deposit is protected.

If, however, a tenancy pre-dating 6 April 2007 is allowed to run as a periodic tenancy at the end of the six months, and no new tenancy is created, then the deposit does not have to be protected.

Landlords will have 14 days from the beginning of a new tenancy to tell tenants which scheme is being used and where their deposit is being held. Where landlords fail to meet the new rules tenants can go to the county court to find out these details, and the court could order the deposit to be repaid or given to a third party to look after.

The court can also order the landlord to pay the tenant three times the deposit within 10 days if a landlord has not met the regulations before the hearing.

Many letting agents already belong to tenant deposit schemes. Landlords who rent out their properties through a letting agent need to check with their agents to see whether they are already complying with the legislation.

A landlord who takes a deposit without being in an approved scheme or does not give his tenant details of the scheme cannot give notice to take possession of his property.** 

For further information contact Stan Ellison on 0151 356 6472 or email stan.ellison@epnbc.gov.uk

Ends

Press release issued: March 15 2007