Amendments made to the Localism Act 2011 came into effect on April 6th 2012, so landlords need to ensure they are familiar with the new rules affecting tenants’ deposits, or they risk being hit by stringent fines.
What are the changes?
Under the old rules, landlords had 14 days to place their tenant’s deposit in a government approved deposit protection scheme and provide information about the scheme used. However, despite the strict rules and regulations, many landlords were able to exploit loopholes when appealing against fines for non-protection of deposits.
But things have been tightened up and new rules introduced. Landlords now have 30 days instead of 14 days to pay a deposit into one of the approved protection schemes and the longer notice period negates any potential arguments that there was not enough time to protect the deposit. Although fines handed out by judges will now be discretionary, they are likely to be more heavily enforced, and depending on the perceived seriousness of the transgression, could be as much as three times the original deposit. Landlords will also be unable to apply for a Section 21 possession order until the judge has made a ruling on the case.
Another big change landlords need to be aware of is that if a landlord does not adhere to the 30 day deadline, the tenant can make a claim against them for up to 6 years after the end of the tenancy.
Who will be affected by the new changes to the deposit protection rules?
The changes affect new tenancies that started on or after April 6th 2012, and in the case of existing tenancies, landlords have 30 days to place deposits in an approved deposit protection scheme.
