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Helen Matthews, Consultant at Bircham Dyson Bell LLP, explains
the changes to the rules regarding tenancy deposit schemes
("TDSs") which took effect on 6 April 2012.
Landlords of residential properties let under assured shorthold
tenancies ("ASTs") should be aware that as of 6 April
2012 there was a change in the rules relating to the penalties and
obligations under the TDS.
The original intention of the TDS rules was for penalties for
non-compliance to apply both where a landlord protected the deposit
after the deadline set in the legislation, and where the deposit
related to a tenancy which had since ended. Following a
number of Court of Appeal decisions which cast doubt on the actual
effect of the rules the government amended them to clarify and
reinstate their original intention.
These are the changes made:
The landlord now has 30 days instead of 14 days to protect the
deposit in one of the government-approved schemes and to give the
tenant the required information.
If the landlord fails to protect the deposit within 30 days of
the start of the AST the court has the discretion to award
compensation for non compliance of between one (1) and three (3)
times the deposit. The previous rule was that a blanket 3
times the deposit was the penalty for all non compliance
issues. It remains the case that the landlord can also lose
the right to obtain possession of the property on 2 months'
notice, a right which normally applies to ASTs.
The penalties will apply once the 30 day deadline has expired.
The position previously was that the penalties did not bite if the
landlord protected the deposit before the hearing of an application
to court by the tenant seeking compensation for
non-compliance.
The penalties apply notwithstanding that the AST has come to an
end.
The changes are not retrospective. They apply to ASTs
which were in existence on or after 6 April 2012.
On 1 October 2010 the threshold for tenancies to come within
the AST regime was increased from Ł25,000 per annum to
Ł100,000 per annum. It is important to remember that
deposits paid in respect of any tenancy granted before 1 October
2010 which became an AST as a result are now subject to the new TDS
regime, even if that tenancy has not been renewed.
Landlords and managing agents should check their deposit
procedures as soon as possible, if they have not already done so,
and review any existing tenancies to ascertain whether they fall
within the new TDS regime.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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