Are you registering your tenants deposit correctly?
Registering deposits and issuing the correct paperwork can be an overwhelming task but doing this correctly could save you thousands! Holding a deposit from your tenant has certainly become more complicated than it used to be.
New legislation came into force called ‘tenancy deposit protection’ as of April 2007. This law means any tenancy entered into on this date or after, on an assured shorthold tenancy agreement must be registered with a government approved tenancy scheme and this must be done within 30 days of the payment being received. This law applies to all landlords whether they use an agent or not.
And it doesn’t end there! The tenant must also be provided with documentation surrounding this process/legislation, which can be slightly different dependant on which scheme you decide to use. This information makes the tenant aware of the implications the landlord will face for noncompliance and what the tenants should expect in relation to the deposit.
Not following this process correctly leaves the landlord exposed, facing substantial financial penalties as well as implications regarding gaining possession of the property, should you need to for any reason.
Be aware of:
Strict timescales
Correct documentation being issued to tenants
Capped deposit amounts
Changing legislation
Noncompliance can be costly
DEPOSIT CAP
Further legislation as of 1st June 2019 put a cap on the amount of deposit a landlord can accept from the tenant. This is set at maximum of the equivalent of 5 weeks rent, where the annual rent is less than £50,000 per annum. For existing tenancies that are renewed on a fixed term basis after 1st June 2019, are also subject to this law and the difference between what has been collected and what amount is now legally allowed to be held, will need to be refunded. There is no special provisions or exemptions for if a tenant has a pet, if this was agreed on an existing tenancy or new. The maximum deposit amount must still be within the legal capped limit. You may want to read out article ‘are you a pet friendly landlord’ to see the solution to this.
Keeping up to date with the numerous changes in legislation can be extremely overwhelming and what we have mentioned does not cover all aspects of a landlords obligations. Using an agent to help keep you compliant has never been more vital. Being an agent that only specialises in lettings, we truly can be relied on in this respect.
We are well established and only employ a team that have the experience to guide you. If you are managing your property independently and are worried about any of what we have mentioned in this article or if you would like to see how we can take the hassle out of registering your tenants' deposit, you can always speak with one of our Lettings Specialists on 01621 850145.