New laws to protect tenancy deposits

Tuesday, 2 January 2007 12:00 AM

This year will see a major new law passed that will change the way landlords can use tenant's deposits with big fines being introduced aimed at rogue landlords.

From April 6th 2007 landlords across England and Wales will have to join an Assured Shorthold Tenancy (AST) scheme that will safeguard any deposit paid by a tenant to a landlord.

This will see landlords taking the deposit from the tenant notifying the scheme administrator that the deposit should be protected.

If the landlord then needs to withhold the deposit, under the new laws they must give details to the tenant about the scheme being used within 14 days.

However, landlords who do not join an AST scheme could be fined three months rent on each tenancy.

"This is one of the most important changes in the private rented sector for many years," said David Salusbury, chairman of the National Landlords Association (NLA).

"There are 2.5 million households that rent privately in England and Wales, representing nearly 12 per cent of the total - that's one in eight households.

"The vast majority of British people live in rented homes at some point in their lives, so anything that affects tenants is a major concern to the media and to consumers generally."

Government figures show 19 per cent of deposits are returned in part, and 11 per cent are withheld, with 17 per cent of those not getting all their deposit back saying they felt it had been held back unjustifiably.

"In many of these cases the tenant has caused damage to the property or failed to clean it, and the landlord has quite legitimately withheld the tenant's money," Mr Salusbury added.

"However, we recognise that there are rogue operators in the sector, and we want to see them rooted out. It is because of the malpractice of a small minority that the government has decided to act, by introducing mandatory tenancy deposit protection."

Mr Salusbury strongly advises landlords to be prepared in advance of April 6th by selecting a suitable AST scheme.

More information about the AST schemes and the new laws is available from www.mydeposits.co.uk and www.communities.gov.uk

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