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A-Z of property management

D IS FOR DEPOSITs!

D is for Deposits!

Tenancy deposits were introduced in April 2007 under the Housing Act 2004. The legislation was so badly drafted at the time that it has, following several test cases, most notably Superstrike Ltd vs. Marino Rodrigues [2013] and Spencer v Taylor [2014], had to be amended twice – in the Deregulation Act 2015 and the Housing and Planning Act 2016, along with changes to the section 21 rules.

It is now crucial that:

  1. Deposits are protected within 30 days of receiving them in one of the government approved schemes.
  2. The statutory information (s213 Housing Act 2004) is served on the tenant, or on anyone else who pays the deposit, and any guarantor should be copied in.
  3. Proof of serving is obtained.
Amplo Lettings | Letting Agents Crewe | Property Management Crewe | Rent in Crewe

Our top tips are: Ensure that tenants know what a deposit scheme is and what it means, it’s not just there for you to take if they’re short for their rent one month, it’s there as a safety net, a guarantor that the tenant will take good care of the property up until the end of their tenancy. Next, we’d say ensure that it’s in a decent deposit scheme – ask around, there are only a select few but make sure that it’s in a good one! Ask your fellow landlords and letting agents which ones they use and why? Have they needed to claw back a full deposit and the scheme were really helpful? 

Finally, we would strongly recommend waiting until day 29 to protect the deposit! You have 30 days to protect it, so why protect it on day one? By protecting the deposit straight away, you run the risk of unnecessary admin; let’s say the tenant pays the deposit on day one, you protect it on day two, then in the afternoon of day two, they decide that actually they don’t want the property, or something goes wrong and they want to leave immediately… you now have to waste time with the deposit scheme, possibly even a solicitor (if the tenant doesn’t know how to fill out the form to return the deposit) – which is why we’d recommend leaving it until day 29!.

Let us know – what other helpful tips and tricks do you have about deposit protection schemes?!