Deposit - Protection From 2007 - Renting
Any AST deposits must be registered if the rent is
- below £100,000 pa. Housing Act 2004.
- Exceptions are:
- Tenancies pre-dating 6 April 2007, however by 6 May 2012 all such deposits must have been registered
- Common Law Tenancies (CLTs) including Company Lets and
- Non ASTs. e.g. Lodgers with resident landlords in houses designed as a single dwelling (not converted to purpose built flats).
- Deposits when required must be handled carefully to avoid inadvertently breaking the law.
- There are prescribed forms and time limits which must be adhered to, in order to avoid fines of 1 to three times the value of the deposit. (formerly up to 3 times the value so judges could award nothing).
- The minimum award is thus now 1 times the value of the deposit and of course the deposit must also be returned!
- As an agent, additional care must be taken when returning certain deposits to tenants.
- Agents must avoid becoming erroneously liable for subsequent recovery of deposits returned to a landlord for which the agent might be responsible for paying (again) to the tenant.
- The landlord and not the agent might actually be the responsible party.
- To protect an agent; the agent can require the landlord (who agrees to the release of a deposit or portion thereof) to provide an indemnity so as to protect the agent should there be a later claim from the tenants.
- Claims can be made retrospectively up to six years! Limitation Act 1980
- With any deposit it is important to stipulate: Mnemonic i-padch (combination of i-pad and eye-patch triggers memory) :
- Interest - specify whether payable to tenant
- Protection - What the deposit is protecting
- Amount - The amount of the deposit
- Dispute - What happens in the event of a dispute.
- Conditions - on returning within time limit.
- Held - Who holds the deposit - which scheme?
See also
- Tenant fees Act 2019 which restricted fees AND the maximum amount of deposit permitted.
- Maximum 5 weeks’ rent as a deposit.
- Exceptionally - 6 weeks if the rent exceeds £50,000 a year.
- Prescribed information
- How to rent guide
Published: 5 November 2013 Last Updated: 4 December 2021