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Deposit - Protection From 2007 - Renting

Any AST deposits must be registered if the rent is
  • below £100,000 pa. Housing Act 2004.
  • Exceptions are:
  • 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

Published: 5 November 2013 Last Updated: 4 December 2021