Most landlords will remember the introduction of the rent deposit schemes in 2004. The rules are about to change. From 6th April 2012 landlords have 30 days rather than 14 in which to protect their rent deposits. This may sound beneficial and whilst it does give landlords additional time to protect deposits the new legislation is stricter on landlords and closes any loopholes available in the current legislation.
The prescribed information should also be given to the tenant within the 30 day period.
Under the present rules a landlord can protect a rent deposit out of time and as long as the rent deposit has been protected a section 21 notice can be served. From 6th April 2012 a section 21 notice cannot be served at any time if the rent deposit was not protected within the 30 day period. A landlord will not be penalised by not being able to serve a section 21 notice if the Court has already dealt with the failure to protect the deposit or if the landlord has repaid the deposit.
Landlords cannot protect their deposits after the tenancy has ended and if a tenant takes Court action after the end of the tenancy then the landlord will need to repay the deposit to the tenant.
The legislation does give the Court greater discretion in applying penalties. The Court has the option of fining a landlord who has not protected a deposit between one and three times the value of the deposit. It is likely that an administrative oversight will attract a lesser penalty than a persistent refusal to protect a deposit although the new rules provide little guidance on this.
Landlords should put systems in place to ensure that their deposits are protected within the 30 day period and that tenants are given the prescribed information.
Landlords who are unsure of their legal obligations in relation to rental deposits or who face Court action by tenants should seek legal advice.
By residential landlord solicitor, Louise Hebborn
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