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Protecting deposits - and your pocket

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Protecting deposits - and your pocket

With the relatively new government backed ‘help-to-buy schemes’ there has been significant growth in first-time buyers, whether this is through obtaining equity share loans, using a help-to-buy ISA’s to save for initial deposits, shared ownership deals, and mortgage guarantee offers.

However, has this increase in government help caused a decline in the need for landlords and rented properties?

Within a recent survey conducted by the Deposit Protection Service (DPS), a trend has emerged that long-term renting continues to grow for many people rather than purchasing their own home.

Within the survey of 1,000 tenants, the organisation found that two in five renters are not looking to buy a property and instead intend to rent long-term.

"Renting is a vital part of the housing sector, and a significant proportion of the population choose to be tenants as it better suits their life plan or lifestyles," says Julian Foster, managing director of the DPS within the report.

What does this mean for landlords?

Whilst residential renting remains a much needed method of accommodation for many people within the UK, landlords or potential future landlords need to be aware of the risks that they are faced with when renting.

The DPS is one of three government-approved tenant deposit protection schemes in which landlords, or letting agents must protect tenants' deposits. One of the biggest problems that landlords are faced with are issues regarding deposit protection.

It is not uncommon for landlords to take a deposit at the start of a tenancy, however it is becoming a recurring theme in landlord and tenant disputes that a landlord has failed to protect their deposit in an appropriate and legal scheme.

Once a landlord receives a deposit they have 30 days to protect the deposit in one of the necessary schemes. New landlords who have little or no experience in renting properties, may believe that it is normal practice to simply hold onto the deposit money themselves. However, if a dispute arises between a tenant and a landlord, and it comes to fruition that the tenancy deposit was not protected, this can have serious implications for a landlord; including preventing a landlord from seeking possession of a property and the landlord being responsible for compensation of up to three times the amount of the deposit.

As well as protecting the tenant’s deposit, a landlord must also: provide tenants with gas and electric safety information, must check that tenant has ‘the right to rent’, must carry out most repairs, must meet certain safety standards, follow the rules on accepting rent, must follow tenant eviction rules and not disturb or harass a tenant. It is difficult to bring a claim against a tenant, if you have failed to adhere to your responsibilities as a landlord.

If you are a landlord who requires assistance in any form of landlord and tenant dispute, or are considering becoming a landlord and require assistance in understanding the law surrounding residential renting and the requirement to being a lawful landlord, then please call us on 01616 966 229.