An extremely concerning new report has revealed that a large number of tenants are worried about the whereabouts of their deposit.
Many has expressed fears that they think their deposit has not been secured in a protection scheme and that either their landlord or letting agent has pocketed the money.
The study was conducted by online letting agents PropertyLetByUs.com and reveals:
- 70% of tenants are concerned about their deposit
- Only around 50% of tenants have received confirmation that their deposit is safely in a protection scheme
- Nearly three quarters believe that their landlord or agent will keep their deposit and the end of their agreement
It is estimated that £3.2bn worth of deposits are currently being held in deposit schemes, or by agents and landlords. Recently, the Government has pledged to reform rental deposit legislation, looking to make sure renters have, ‘proper consumer protection, including protection from landlords who withhold deposits unreasonably.’
Jane Morris, Managing Director of PropertyLetByUs.com feels, ‘tenants are right to be concerned. While deposit protection schemes protect tenants, there is little or no policing to ensure landlords and agents are compliant.’
‘Our research shows that tenants simply don’t trust landlords and agents with their deposits, which is disappointing in light of the fact that the schemes have been around for many years. Agents and landlords have a legal obligation to put deposits in one of the three approved schemes within 30 days of receiving it.’
‘There definitely needs to be reform and hopefully the Government will introduce new measures that will ensure that tenant deposits are fully protected.’
As a buy-to-let landlord, it is imperative that you protect your tenants’ deposits in a Government approved redress scheme. Failure to do this will not only see you void on any landlord insurance policy you have taken out but will also see you facing severe sanctions.
These obligations fall under the Tenancy Deposit Protection (TDP) process, introduced under the Housing Act 2004. The rules apply to all landlords and letting agents in England and Wales who have taken a deposit from a tenant under an assured tenancy on or after the 6th April 2007.
You have three choices of approved redress schemes in which to protect deposits received. These are:
- Deposit Protection Service (DPS)
- Tenancy Deposit Scheme (TDS)
Deposits must be paid into your chosen scheme within 30 days of receipt. This is your responsibility as a landlord, regardless of whether you are using a letting agent to manage your asset or not.
Once you have paid the deposit into your preferred scheme, it is also vital that you provide your tenants with information on:
- address of the property
- amount of deposit taken
- name of the scheme the deposit is protected in
- contact details of this scheme
- name and details of any third party involved, ie the letting agent
- how to retrieve the deposit
- what to do in case of a dispute