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Landlords fail to sign up for deposit guarantee schemes

Friday, 31 August 2007 12:00 AM

While more than 150,000 landlords have joined the government Tenancy Deposit Protection (TDP) scheme, more than three in four have failed to do so.

The scheme has only been compulsory for the six months after April 6th and many landlords may not have begun a new tenancy in this period, states the National Landlords Association.

However, there may be more worrying trends behind the poor take-up of the scheme.

The TDP scheme only applies to Assured Short-hold Tenancy Agreements (ASTs) in England and Wales and it is feared landlords may now be moving away from this form of tenancy.

Some landlords have been offering assured tenancies to avoid the TDP scheme, while some have simply stopped taking deposits altogether.

"This could prove to be a risky strategy for landlords. Assured tenancies, as distinct from assured short-hold tenancies, make it very difficult for landlords needing to recover possession of their property," said David Salusbury, chairman of the NLA.

"For most landlords, avoiding the requirement to protect a deposit at the expense of compromising their ability to get the property back makes little business sense."

The NLA states that all landlords should take a deposit for a rented property. It encourages tenants to maintain a property and gives landlords a method of redress should they fail to do so.

However, there could be a hardcore of landlords who are aware of the scheme and have chosen not guarantee deposits in the appropriate manner.

"The penalties for non-compliance with tenancy deposit protection are severe - a court can order the landlord to repay the deposit plus a penalty of three times the amount of the deposit," concluded Mr Salusbury.

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