Most, if not all, landlords will take a deposit from their tenants. A Tenancy Deposit Scheme (TDS) will protect the deposit for the tenant and ensure that the tenant will receive it back at the end of the tenancy. The landlord can still use the deposit in accordance with the tenancy agreement. For example, to repair damage to the property.
A TDS also encourages the tenant and landlord to use alternative dispute resolution when disputes do arise.
Let’s look at some questions landlords frequently ask me.
| I am a Landlord and have taken a tenancy deposit from my tenant. What do I need to do next?
- You must pay the deposit into a TDS within 30 days of receiving the deposit.
- You must give the tenant or relevant person (someone who has paid the deposit on the tenant’s behalf) the prescribed information about the deposit and where it is held. The TDS will provide copies of this.
- You should ask your tenant to sign to confirm receipt of this information. Keep a note of when you served this information on the tenant.
| I have forgotten to protect my tenant’s deposit! Can any action be taken against me?
There are penalties for landlords who fail to comply with the rules.
If you fail to pay the deposit into a TDS and / or fail to comply with the requirements of the scheme, you may face financial penalties.
A tenant can apply to the court for the deposit to be returned. They may also make a further claim for one to three times the amount of deposit.
For example, if you took a deposit for £1,000 and failed to protect it in a TDS, the Court may order that:
- the £1,000 is returned to the tenant; and
- you pay £3,000 to the tenant as a penalty.
The court will make the final decision as to how much you must pay.
| I didn’t protect the tenancy deposit, but I want to recover possession of my property. Can I still serve notice on my tenant?
There are two types of notices you can serve on your tenant to seek possession of your property. Notice 1 does not require the tenant to be at fault. Notice 2 can be served where your tenant is in rent arrears, there is disrepair etc.
If you didn’t protect the deposit, you will not be able to serve Notice 1 until you have complied with the requirements of the TDS. To make sure you have done this correctly and what impact this will have on seeking possession of your property it is important to seek legal advice.
| I protected the deposit but didn’t give my tenant the prescribed information. Can I still serve notice on my tenant?
If you did not comply with the initial requirements and serve your tenant with the prescribed information you will not be able to serve Notice 1 until you have complied with the requirements of the TDS. To make sure you have done this correctly and what impact this will have on seeking possession of your property it is important to seek legal advice.
You may still be able to serve Notice 2 if you have grounds for possession, but there are risks involved with this and it could mean you are not successful at seeking possession of your property. This is because if you wish to serve notice on your tenant due to their being rent arrears, and you have failed to protect the deposit and/ or serve your tenant with the prescribed information your tenant may be eligible to make a claim against you for up to 3 x the deposit. This may substantially reduce the rent arrears which could mean you cannot seek possession of your property back.
As can be seen, it is vital that landlords know what is required of them and comply in good time. If you are a landlord who is facing one of the above issues, rest assured there are remedies. Please contact our team to discuss further on 0800 988 7756.
