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A recent quiz conducted by Urban and the National Landlords Association highlighted that an astonishing 90% of private landlords do not protect tenant deposits correctly.

What are the potential consequences of this?

Court Orders and Repayments

Tenants can take you to court if you haven't protected their deposit correctly. If a court finds
that you haven't protected a deposit correctly, they can order you to:

  • Repay the deposit to the tenant.
  • Pay the deposit into a tenancy deposit scheme's bank account within 14 days.
  • Pay the tenant up to three times the deposit amount within 14 days.

It should go without saying that having to pay additional monies to the tenant could have a significant impact on your rental yield and overall profit, so for financial reasons it is crucial you
are correctly protecting tenants' deposits.
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You Can't Issue a Section 21 Notice

Failure to protect a tenant's deposit correctly means you can't issue a section 21 notice.

You have failed to protect a tenant's deposit correctly if you:

  • Don't protect the tenant's deposit at all.
  • If you protect it late. You should protect it and provide the prescribed information within 30 days of taking the deposit.
  • Did not provide the tenant with the Prescribed Information. The Prescribed Information includes a receipt for the deposit, details of how and where the deposit was protected, your contact details, and information about how the tenant can get their deposit back when they leave.

Whether you are looking to issue a section 21 notice because you need the property back to live in
it yourself, are looking to sell up, or want to remove tenants in arrears without the hassle of going through the section 8 process, it's crucial that you have protected your tenant's deposit correctly.

Make sure you do things right at the start of the tenancy to potentially make things easier at the end of the tenancy.

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How to Protect a Tenant's Deposit Correctly, and Protect Yourself!

With over 90% of private landlords potentially leaving themselves at risk of fines or not being able
to issue a section 21 notice, let's take a look at what you need to do to protect a tenant's deposit correctly.

  • You should not take a tenancy deposit of more than the equivalent of five weeks' rent. 
  • Once you have taken a tenancy deposit, you must protect it with one of the three government approved schemes within 30 days.
  • You must provide the tenants with the prescribed information within 30 days.

What is the Prescribed Information?

Once you have taken the tenants deposit, you have to notify them of the following within 30 days:

  • The address of the rented property. They'll already know it because they live there,
    but you need to be clear on the property the deposit relates to.

  • How much deposit the tenant has paid.

  • How you have protected the deposit.

  • The name and contact details of the government approved tenancy deposit scheme
    you have used, and details of its dispute resolution service.

  • Your name and contact details, or the name and contact details of the letting agent,
    if you're not a self-managing landlord.

  • The name and details of any third-party that has paid the deposit, such as a guarantor.

  • Circumstances under which you may keep some or all of the deposit.

  • How the tenant can apply to get their deposit back.
  • What the tenant should do if they are unable to contact you, or the letting agent,
    at the end of the tenancy.
  • What the tenant should do if there's a dispute over the deposit.


Find out more about FREE Tenancy Compliance Service


Consider Offering Zero Deposit

If you offer tenants a zero deposit option, then you can avoid the need to protect the tenant's deposit, reducing your paperwork and making it easier to maintain compliance as a landlord.

You can learn more about zero deposits below.

Find out more about Zero Deposits

Upad offers its tenancy compliance service as standard to all landlords, too, helping you to be compliant when it comes to tenancy deposits as well as with your assured shorthold tenancy agreements, energy performance, and gas safety certificates.

 Register Free


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By Sandra Mpouma
10 Jun 2019

Categories: Deposits, Section 21 Notice



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