Are you aware of the new financial penalties facing landlords if they fail to place their tenant’s deposits in an approved scheme within thirty days of receipt of the money?

As of the first of April this year, the new Localism Act instigated by the government to protect tenant’s rights comes into effect. One of its requirements is that money handed over to a landlords or letting agents as a deposit on a rental property, must be placed in a protection scheme in order to safeguard the rights of both tenants and landlords should there be any tenancy disputes at a later date.

Once the money has been deposited, the landlord is required to pass on information to the tenant about the Tenancy Deposit Scheme (TDS) within the thirty-day period. This information includes a leaflet and a deposit protection certificate, plus confirmation that the deposit has been registered on the TDS database.

Should the landlord fail to place the money in the Tenancy Deposit Scheme within the thirty-day period, the tenant has the right to make a claim for up to four times the original amount of their deposit. They can do this as soon as the thirty-day period has expired, even if the landlord is one day late or the tenancy has ended, although the courts will take these factors into account if a case is brought before them.

With such severe financial penalties at stake, it is essential that landlords and letting agents comply with the rules, or they may face numerous claims from savvy tenants.

As the rental market continues to grow, there is some concern that unregulated letting agents are ripping tenants off with variable fees and significant up-front charges. Because of this, many experts are calling for the government to force letting agents to adhere to the same standards estate agents are subject to.

Research has shown that fees charged by letting agencies vary enormously across the country and tenants are often completely unaware of what charges they are incurring before they sign a rental agreement. Of the twenty-five letting agents surveyed, only two openly displayed their fee structure on their website, and in most cases, tenants were left completely in the dark until it was too late.

With an increasing number of families forced to move into the private rental sector, this kind of behaviour could leave many households financially disadvantaged—a lot of tenants are being forced to find a deposit for a new property before they are handed their old one back. If letting agents were regulated in the same way as estate agents, some of the more unscrupulous practices could be outlawed. Charges also need to be more transparent so that tenants know exactly what they paying right from the start. It should also be made easier to transfer deposits between landlords.

With increasing numbers of tenants seeking rental properties, the market is incredibly buoyant, but unfair practices harm everyone, especially vulnerable tenants, and as a landlord, I am strongly in favour of anything that helps to keep the rental market fair.