When it comes to tenancy deposits, do you know the correct procedure?
Our latest survey has looked into this issue, with the results showing a staggering and worrying lack of knowledge, when it comes to the law regarding deposits. Our survey included over 1,000 Britons involved with the UK private rental sector (PRS).
The Housing Act 2004 clarifies that landlords in England and Wales have a legal requirement to protect the deposits for Assured Shorthold Tenancies (ASTs) in a Government-approved scheme. Those who do not do so may end up paying the affected tenant up to three times the amount of the original deposit, on top of the original deposit amount.
Our survey asked: “If the landlord has not complied with tenancy deposit law, how much of the original deposit do you think the tenant can claim for when they leave the property?”
Only 2% of respondents were able to identify the correct answer of ‘three times the amount, plus the deposit’.
We are overwhelmed by the result of 98% not knowing the correct rights of a tenant.
Looking at those aged 55 and over, we also received a worrying response. 70% of results from this age group believed that the maximum amount available to a renter was the full amount plus deposit. With some of society’s most vulnerable being those in this category, our concern is that, due to their lack of awareness of correct legislation, they risk becoming a target of rogue landlords.
Equally, we are concerned for landlords who are unaware of the law, as they may be unwittingly putting themselves at risk of receiving hefty fines and payouts to tenants, when it can be so simply avoided by following the correct procedure.
Another question in the survey asked participants to identify where a tenant’s deposit should be kept during the duration of the tenancy. Two-thirds (66%) did not know that the correct answer is in fact to place deposits within a Government-approved scheme. Looking specifically at the age group of 18-24, even fewer were able to respond correctly (16%).
With 65% of those aged between 16-24 living in the PRS, we find these results alarming. These tenants could potentially be exposed to missing out on money that they are legally entitled to.
8% provided the response that they thought the deposit was held in the landlord’s personal bank account. Almost a quarter (24%) believed it was letting agent looked after it.
To provide insight of what could happen when your deposit is mishandled, we wanted to share the story of Sally, who came to us seeking property advice when she was renting with a deposit that was not lawfully protected.
Sally told us how she found the perfect apartment in an ideal location, and so went to the letting agent that advertised the property and secured it by putting down a deposit.
It was sometime after Sally moved in when she discovered online that tenancy deposits must lawfully be in a Government-approved protection scheme. She suspected that it was likely her landlord had not complied with this law, and so she immediately emailed her contact at the agency about her concerns. Eventually, Sally received a response confirming her worries: her deposit was not protected.
Responding fast, Sally stated her rights to the letting agent and was eventually rewarded with the full compensation – three times the deposit amount, plus the original deposit. Luckily for Sally, this dispute was settled between her and the letting agent, which avoided taking the case to court.
If Sally had not taken the initiative to research her tenancy rights, she could have lost a large sum of rightfully owed money. Reflecting on her experience, Sally has asked us to share her advice for all prospective and current tenants to extensively research their rights. By taking the time to do so, you may save yourself a lot of money that otherwise may have been lost or missed out on.
She has also strongly suggests looking at reviews for letting agents, before deciding to go with them. We could not agree more that you shouldn’t be tempted to go with a letting agent, just because they list the property you want. It’s just not worth the problems that may arise later on in the tenancy.
With the deadline to claim mis-sold PPI coming up in August this year, we wanted to know if the public awareness of such a scandal had changed opinions towards consumer rights. 37% of respondents said it had not made any change in their attitude. Just under three-quarters (74%) of those asked said the PPI scandal hadn’t changed their awareness when it came to reading the terms and conditions of a signed agreement.
Cases such as Sally’s have highlighted the importance of awareness and understanding of consumer rights, as it provides more of an opportunity for individuals to defend themselves.
Rose Jinks, the Spokesperson for Just Landlords, says: “It’s shocking that so few people understand their rights when it comes to tenancy deposits, especially as more people than ever rent from a private landlord. We believe that the companies currently seeking PPI compensation for consumers may turn to unclaimed tenancy deposits when the deadline comes into force in August this year.”
She adds: “Tenants may find that they could claim back three times their deposit, plus the original deposit amount, if their landlord didn’t comply with the law, while landlords could be faced with a significant bill. We urge all of those in the private rental sector to understand their rights and responsibilities surrounding tenancy deposits.”