Property managers and letting agents have yet another piece of bureaucracy to deal with when the new tenancy deposit protection scheme comes into force in a few months’ time.
On the face of it, this is a good scheme for anyone who looks after property either on their own behalf or on the behalf of a landlord as it protects the deposit paid by tenants when they first move in to a property.
The deposit is put in a Government-backed scheme registered with the Deposit Protection Service, MyDeposits or the Tenancy Deposit Scheme in England and Wales. There are separate schemes in Scotland and Northern Ireland.
So if the tenant does not meet the terms of his or her agreement, damages the property or falls into arrears with the rent or with household bills such as electricity, phone and gas, the deposit can be used to pay off these debts.
If there is a dispute with the tenant, the deposit is protected in the TDP scheme until the problem is resolved.
However, as always, things are not simple. The property manager or landlord needs to comply with certain terms of the Government scheme or face a fine.
Within 30 days of receiving the deposit, they need to inform the tenant of the amount of the deposit, how it is protected, the letting agent’s or landlord’s name and contact details, and how to apply to get the deposit returned.
There is additional information which must be provided to the tenant. One way in which to ensure that you remain compliant with all elements of the TDP scheme is to create or download a form containing all the questions that need answering.
These details can also be stored on an app or online so that they are readily available. A reminder as to when the tenancy is due for renewal – and the deposit details – can also be stored in Google calendars or specialised property inventory and inspection software, for example.
Anyone with assured shorthold tenancy agreements needs to have registered with the Government TDP schemes – or risk a substantial fine. The scheme applies to all such tenancies regardless as to when the deposit was first taken.
If the deposit is not protected and the tenant is not given information about the scheme being used, the landlord can be ordered to pay compensation which could be up to three times the value of the original deposit. This penalty may be even higher for professional landlords or letting agents as they should be aware of the law.