Q&A - What is the current legislation regarding deposits for rented property?

Q: Rather than selling in the present climate I am considering letting out a small house I have inherited. What is the current legislation regarding deposits?

A: It depends on the type of tenancy agreement. Most private lettings are now considered to be assured shorthold tenancies unless the landlord serves notice to the contrary. Assured shorthold tenancies offer no security of tenure to tenants and landlords are guaranteed possession of the property after giving the tenant two months’ notice of their intention to obtain possession.

Within fourteen days of receiving the deposit the landlord must place it into an authorised deposit protection scheme and provide notice to the tenant of prescribed information about the scheme and their rights.  Some letting agents can do this but it remains the responsibility of the landlord.

Deposit protection schemes are free for both landlords and tenants, the running costs being paid by interest accruing on deposits. Insurance backed and third party deposit schemes are available, though insurance backed schemes incur a premium payable by the landlord, to protect the tenants deposit throughout the tenancy period, against the landlord going bankrupt.
 
A dispute resolution scheme is available at the end of the tenancy and there are sanctions for non-compliance.  The main sanction being that a tenant can apply for a Court Order to get the deposit repaid or placed into an authorised deposit protection scheme and, further, that the landlord pay the tenant three times the amount of the original deposit. The Court will not allow the landlord to take back the property if any notice to quit was served when the deposit was not held under the authorised deposit scheme.

Landlords have many different responsibilities governed by legislation and the terms of their tenancy agreement.  You should seek professional legal advice before entering the property rental market to ensure your tenancy agreement on your property is drafted to your benefit.

Further information relating to this question is available from Rod Waters, a Solicitor with GHP Legal who specialises in Civil Litigation and Dispute Resolution at our Wrexham Office on 01978 291458 or Nick Kennan, a solicitor with GHP Legal, Commercial and Civil Litigation department at our Oswestry Office on 01691 659194.For information relating to any other legal matter please call GHP Legal on 01978 291456. GHP Legal is the new name for Gwilym Hughes & Partners.

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