A recent Channel 4 investigation has revealed that despite government assurances to the contrary, deposits placed in deposit protection schemes are not 100% safe. Unfortunately, even when a deposit is placed in a government approved protection scheme, tenants are still not protected from rogue landlords.
Rogue Landlords Strike Again
The Channel 4 investigation centred on a self-styled property guru who made his money letting properties from landlords and then sub-letting them as single rooms. As a landlord, Mr Burton was obliged to place deposits he received into a government approved protection scheme.
Because such schemes are insurance based, the landlord is allowed to keep hold of the cash until the end of the tenancy when he is obliged to return the tenant’s deposit (minus any deductions if applicable).
But what happens when a landlord is expelled from the deposit protection scheme?
The landlord above was expelled from the My Deposits scheme for flouting the rules. All affected tenants were informed that their deposits would only be protected for a further three months. Meanwhile the landlord was left with lots of money in his bank. So if the landlord decides not to pay this money back there is nothing the tenant can do. Their only recourse would be to take the landlord to court. Clearly there is a flaw in the tenancy deposit system that needs addressing and campaigners say the current situation is unacceptable.
As Alex Hilton from Generation Rent comments: “it’s a tenancy deposit protection scheme – they have told people that their deposits are protected: they’ve got to protect the deposit.”
