If you have been reading the landlord press you cannot have failed to notice that there is something happening with the tenancy deposit regulations.
I daresay though that many landlords will have skimmed this thinking that it does not apply to them for some reason.
Don’t do this or you may get caught out!
Here’s what you need to do:
1. Make a list of all the tenancy deposits you have taken for tenancies which have not ended yet
For some landlords this will be a short list! For others it may take a while to work it out.
However do this, as then it will be easier for you to check your position.
2. Check your records for each and every tenancy to see if it has been protected
It might be an idea too, to write down the tenancy deposit scheme you have used for each deposit.
Hunt out the paperwork and forms (to make sure you still have them) and keep them carefully.
3. For every deposit that has been protected, check to see if you have served the prescribed information
This needs to be done AS WELL as protecting the deposit.
- If you have protected with TDS or Deposit Guard you should have been sent a form you can use.
- If you have protected with the DPS you will find a template on their website here
- If you have protected with My Deposits you will find detailed guidance on what you need to do here (this is a pdf document)
If you have served the information, make sure you can prove this if challenged. If there is any doubt, serve it again, just to be on the safe side.
If you have not served it, DO IT NOW!
If you are serving the information now, make sure you keep proper records so you can prove that you have done this, if challenged.
4. If you have not protected the deposit, write down why
If it is because you forgot, then DO IT NOW! And serve the prescribed information.
If it is because the tenancy is not an AST, check to see whether it is likely to turn into an AST at any time in the future. If so, it might be worth protecting now anyway, just to be on the safe side.
Note – if you did not protect the deposit because the rent was over £25,000 and the tenancy was not an AST – this changed in October 2010 and the tenancy IS now an AST. So you need to protect the deposit ASAP.
Deposits taken from lodgers by the way, do not need to be protected as lodgers cannot be assured shorthold tenants.
If it is because you took the deposit before 7 April 2007, ie before the rules came into effect so it is exempt, consider protecting now anyway – there is an outside chance that the wording of the new rules may cover older deposits.
These last two points were raised by solicitor David Smith in his blog post here.
Note also that, for pre 2007 deposits, if you have given the tenant a new tenancy since 2007 the deposit should have been protected at that time. So if it wasn’t, do it now. And serve the prescribed information.
Why do you need to do all this now?
Because the new regulations are retrospective and will apply to existing deposits (save possibly pre 2007 deposits and those for non ASTs). AND the rules are being tightened up, so that you will no longer have the option to avoid claims by protecting out of time.
So if the tenant brings a claim for the penalty payment for default – you will have no defence.
When the new rules come into force on 6 April, there will be a 30 day grace period for landlords to protect old deposits, which will last until 6 May. Make sure you get all relevant deposits protected by then!
You have been warned.
Note – I have been provided with a very interesting pdf by David d’Orton-Gibson of www.lettingnetwork.com which you can read here. This gives a lot more detail about the changes in the tenancy deposit scheme and the effect this will have on landlords and agents.