Landlords beware - if you have longstanding tenants and have not yet registered deposits, you could face a £3,600 fine.
The Government is currently holding a 90-day 'amnesty' for buy-to-let property investors who have yet to put their tenants' deposits into an official scheme.
Those who are caught and have failed to do so by the June 23 deadline could face unlimited fines calculated at three times the initial deposit amount.
It has been estimated that of the 1.5 million private landlords in England and Wales, a third of these are not registered deposit protection service. However, not all of these landlords will be caught by the legislation - university lets, licence agreements, and arrangements that are different to a tenancy are excluded.
However, any landlord engaged in an "assured short hold tenancy" agreement must register with one of three Government-backed schemes.
Another important incentive to register is that those who do not could fail in removing a tenant after their contract comes to an end. If there is a dispute between landlord and tenant, by not registering the tenant deposit the landlord will be seen to have failed in their obligations.
The deposit protection system came into force in April 2007 as a means of mediating disputes between landlords and tenants. When it was introduced however it was unclear as to whether landlords with existing tenants would be required to register their deposits. This was clarified in a 2013 case, where the court decides that all tenants should have their deposits protected. In this case, the court determined that tenant Marino Rodrigues, who had moved in a few months prior to the law coming into force, could not be forced to move out when his tenancy ended as a result of the failure of the landlord to register his deposit.
This Government drive applies only to landlords in England and Wales, however landlords in Scotland are also required to register tenant deposits.
Legal Guide for Landlords in Scotland
We have produced a guide for new and existing landlords to help ensure they stay on the right side of the law. Whilst this guide is specific to the law of Scotland, it can act as a handy checklist for landlords all over the UK to ensure they are carrying out the right steps to comply with the law of letting.
Read our legal guide for landlords in Scotland.
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