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  • Deposit Protection

    Putting things right - deposit not protected?

    Apologies if this question has already been covered but I read an article stating that a large percentage of landlords still have not registered deposits correctly which leads me to the question. 

    An elderly family member has been renting some buy2lets for several years but has never registered the deposits with any recognized scheme.

    Not sure if  it’s material but the tenancies have all rolled over from ASTs to periodic tenancies.

    Clearly there is some exposure here, how can I help them put things right?

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    Return the deposits and cross your fingers.

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    Thanks for the reply John,

    What’s your rationale for returning the deposits?

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    I'm not an expert.

    The landlord has committed an offence by not following the prescribed procedure. If any of the tenants became aware of this, and wanted to cause problems, they could pursue the landlord for compensation up to 3 times the amount of the deposit.

    While the deposit is retained, it is more likely that a disgruntled tenant will realise they have leverage over the landlord, and besides, any future claim by the landlord on the deposit would be hazardous. If it was me I would return the deposit, cross my fingers that the tenants never realise, and try to learn from my mistake.

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    Hi Tony

    As the video Vanessa posted above from TDS advises, get the deposits protected, also I would ensure the tenants have the following.

    1. Get the deposits protected by one of the Government Schemes and give copy of deposit protection certificate along with their supporting info sheets to tenants.
    2. Issue tenants with the Governments Latest How to Rent Guide https://assets.publishing.service.gov.uk/..._Jul18.pdf
    3. Issue tenants a copy of EPC Energy Performance Certificate https://www.epcregister.com/ you can check here if the properties have had them done in the past, if not get them done.
    4. Ensure annual Gas Safety Certificates have been done and they have  a copy.
    5. Personally I would draft a 1 Page Letter confirming the above, outlining I confirm I have received 1, 2, 3, 4 etc and get the tenants to sign and date just for records.

    Once they have all of the above as a Landlord they will be fully compliant and you will have a signed letter confirming receipt/Issue of all of the above from tenants.

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    I have watched the video (which I think is misguided), and stand by my original advice to return the deposit.

    PROS of late protecting deposit: IF the tenancy ends amicably, you MIGHT be able to agree some deductions from the deposit.

    CONS of late protecting deposit: You greatly increase the risk that the tenant will sue you for 3x deposit, and may well not be able to use the deposit for it's intended purpose anyway (eg to serve S21).

    If the tenancy does turn sour at the end, I would guess that a judge would penalise a landlord's faulty deposit taking LESS or NOT AT ALL if the landlord had returned it x years earlier than if he was still holding it after protecting it late.

    The downside of protecting late is bigger than the upside.

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