New legislation has changed the way in which it is necessary to protect tenancy deposits. Anyone who owns residential property which has been let to tenants before 6 April 2007 and a tenancy deposit was taken may need to take action.
Government-backed Tenancy Deposit Schemes (TDSs) were created in
2004 and are intended to prevent a landlord from failing to return
a tenant's deposit. They are compulsory for all residential
assured shorthold tenancies (ASTs) created on or after 6 April
2007.
Under the existing scheme, within 30 days of receiving a deposit
for a new AST a landlord is required to protect the tenant's
deposit in an approved TDS, and provide the tenant in writing with
certain 'prescribed information'. This information includes
details of the TDS used and what the tenant can do in the event of
any dispute.
A change in the law on 26 March 2015 has now extended these
requirements to cover all periodic tenancies where a deposit was
taken, including periodic ASTs created before 6 April 2007.
Landlords holding deposits for pre-6 April 2007 tenancies must now
safeguard their tenant's deposit through a TDS and provide the
prescribed information to the tenant immediately. Landlords who
have not complied with the new rules by 23 June 2015 will not be
able to use the common 'section 21 notice' (giving two
months' clear notice to the tenant to vacate the property) to
bring the tenancy to an end, without first returning the deposit to
the tenant in full (or with deductions agreed by the tenant).
Landlords will be relieved to note that the financial penalties
applicable for a failure to put a deposit into a TDS which
currently apply to tenancies entered into on or after 6 April 2007
will not be applicable to tenancies entered into before 6 April
2007.
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.
