If you are a landlord and take tenancy deposits there has, since 7 April 2012, been a very strict time limit.
To comply with the regulations you must protect the deposit and serve the required information on the tenant within 30 days” from the time when it is received” (Housing Act 2004 s213 as amended).
If you don’t, it’s a bit of a fatal mistake, as you will be forever non compliant with the regulations so far as that deposit is concerned.
Now you could possibly return that deposit to the tenants and take a new one. However I suspect many landlords won’t want to do that.
Plus it won’t actually take your liability away for the penalty for non compliance (which is between one or three times the deposit sum, the precise sum to be in the discretion of the Judge).
So what can you do to reduce the risk?
1. Protect the deposit
You should always do this. The whole point of the legislation is to get all deposits protected.
If the tenant makes a claim against you, the Judge will probably make an award at the lesser end of the scale if he can see that you protected as soon as you became aware of the problem.
2. Serve the prescribed information
You will not be fully compliant with the regulations until you have done this. Now some landlords may hesitate to do this, fearing to alert the tenants to the fact that they (ie the landlord) are out of time and that they (ie the tenants) have a fail safe claim.
However again, if the tenant does bring a claim, the Judge is less likely to make a high award if you have complied fully with the requirements.
Note by the way that you need to be able to prove that the information has been served. The best way to do this is to get the tenant to counter sign a copy form.
3. Serve any leaflets provided by your tenancy deposit scheme
Part of the prescribed information includes information about the scheme you are using.
The scheme administrators should normally have special leaflets you can give to your tenant which will provide this part of the information.
4. Don’t antagonise the tenant by making deductions
Generally all tenants want is to have their deposit refunded to them promptly at the end of the tenancy. It is only when this is not forthcoming that they start investigating their rights.
Generally it is at this stage that they will find out that their landlord is non compliant, and start thinking about making a claim for the penalty.
If you return their deposit, and don’t do anything to annoy them, hopefully they will never find out.
5. Get insurance or keep a reserve fund
Now I don’t actually know if obtaining insurance is possible, and it would be helpful if any insurance companies who provide such a service could confirm this by leaving a comment.
However they say that anything can be insured if the premium is sufficient, so it must be possible to obtain insurance against the possibility that a claim will be made against you.
Full disclosure would be required to the insurance company, and I imagine that they would want you to comply with the regulations as a condition of setting up the policy.
Alternatively, if you can’t get insurance, I would advise keeping a reserve fund just in case. You will need to have it available for the next six years.
For a step by step guide which looks at what you need to do, for example if you need to serve a section 21 notice, click here.