bsglaw

PRIVATE LANDLORDS- CHANGE IN LAW THIS YEAR

 

Thursday 23 August 2012 by Keith Parr

 

Landlords of privately owned properties enter into Assured Shorthold Tenancy Agreements with tenants.

 

Such landlords need to decide whether they want to obtain a deposit from the tenants so it can be utilised in the event, for example, of there being damage to the property when the tenant leaves. 

 

However, if a deposit is paid by the tenant to the landlord on commencement of the tenancy the landlord must join a Tenancy Deposit Scheme so that the deposit is protected and returned to the tenant unless the landlord has a legitimate claim on the deposit and to resolve disputes using alternative dispute resolution as opposed to court proceedings.  Such schemes have to be strictly complied with within time limits and there are serious consequences of failing to do so.  Therefore, some landlords decide that it is better not to take a deposit.

 

It is important to understand what constitutes a deposit.

 

A deposit is a lump sum which  the tenant is required to pay before the keys are handed over and the tenant can move into the property. Any money that is taken by the landlord as security for the tenant’s liabilities is deemed to be a deposit. For example, it therefore includes payments described as a “cleaning fee” which is to be repaid to the tenant at the end of the tenancy if the property is clean. Or, additional money charged as rent each month to offset against potential costs of cleaning and repairs even if it is not described as such in the Tenancy Agreement and even if there is clear provision for the money to be repaid to the tenant at the end of the term.  Even a charge of two or more months for rent in advance at the start term of the tenancy can amount to a deposit.

 

Prescribed information has to be provided by the landlord to the tenant within a specified period. 

 

There are potentially significant sanctions for non-compliance including: -

 

1.          The landlord may be prevented from recovering possession of its property by giving notice under section 21 of the Housing Act 1988 unless the deposit has been returned to the tenant, and

 

2.          The landlord may be required to pay money to the tenant by way of a fine equal to between 1 and 3 times the amount of the deposit.

 

As a result of a change in the law earlier this year late compliance does not prevent a fine being imposed.

 

The change in law can have serious consequences where an Assured Shorthold Tenancy was created before the change in law on 6 April of this year as the extended period given to provide the prescribed information expired some time ago now.

 

Before taking any action I would suggest that you obtain advice from me, Keith Parr, Head of the Litigation Department of Blackhurst Swainson Goodier LLP , by telephoning 01772 253841. kgp@bsglaw.co.uk.

 

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