Government approved deposit protection schemes have been around since 2007 but despite this some landlords still believe it’s adequate to bank their tenants’ deposits and not bother with one of the three official schemes.
But the Housing Act 2004, which introduced the tenant deposit legislation, is clear about the penalties should a landlord fail to comply with the regulations.
These rules state that a landlord letting out a property using an Assured Shorthold Tenancy must put the money into (or insure the deposit via) one of the three accredited schemes within 30 days of receiving the cash from the tenant.
Of course there is no tenant deposit police keeping an eye on this system but, instead, matters will unravel if a tenant suspects his or her landlord hasn't lodged their deposit with a scheme. Tenants can easily find this out online via each of the three deposit schemes’ websites and if their landlord still won’t put the money into a scheme, they are entitled to go to court.
At this point most landlords then quickly go on the straight and narrow and ‘get official’ but for those who don’t an automatic fine totalling three times the original deposit awaits.
Many landlords who don’t use the deposit schemes believe it will ‘never happen to them’ but the official figures on deposits reveal how common deposit disputes are. These most recent research reveals that approximately 30 percent of all deposits are contested in some shape or form and consequently only returned in part or not at all.