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Less than 1 week for Landlords to protect deposits

Landlords could be slammed with hefty fines if they fail to place their tenants’ deposits into a tenancy protection scheme by June 23rd.

Although laws brought in back in 2007 require landlords of assured shorthold tenancies to put their tenants’ deposits into an official protection scheme, it was unclear at the time whether this applied to pre-existing tenancies. Many landlords were also unaware of the new rules.

However, a court clarified in 2013 that all deposits under assured shorthold tenancies – the most common type of tenancy – must be protected, no matter how long the tenancy has existed. Landlords have now been given a firm deadline by which they must fall in line.

Deposit protection schemes serve to keep tenants’ money safe and also help to mediate if there are any disagreements about how much of the deposit should be returned at the end of the tenancy.

It is estimated that over half a million private landlords are not registered with one of the three available government-backed deposit protection schemes. Some of these landlords will not be renting under assured shorthold tenancies and therefore not be affected, but a large proportion of them are likely just unaware or unwilling to comply with their responsibilities under law.

A 90-day amnesty during which landlords will still be able to protect deposits began on the 26th of March, when the Deregulation Act 2015 came into force. All affected deposits therefore need to be protected by the 23rd of June.

Landlords who fail to protect tenants’ deposits will face a potentially unlimited fine, worked out at three times the amount of the initial deposit; the average fine would be around £3,600.

They will also be unable to remove tenants at the end of their tenancies using a Section 21 notice, as they will be seen as having failed to uphold their obligations as a landlord.

If you wish to discuss your landlords insurance for your rental properties please feel free to give us a call on 01637 876876, or alternatively:

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We are Personal and Commercial Insurance Brokers based in Newquay covering the whole of Cornwall including Newquay, Truro, Penzance, Liskeard, Redruth, Bodmin, St Austell & Helston.