Dealing with Deposits

admin    Uncategorized     agents

This is the second post in my 2017 Legal Update series.

Today I am looking at Tenancy Deposits

Tenancy deposits were first introduced in April 2007 and ever since then all landlords have had to:

• Protect their tenants’ deposit within a government authorised scheme within a time limit and
• Serve ‘prescribed information’

Although many deposits have been protected and dealt with perfectly satisfactorily under the rules, the legislation proved to be most unsatisfactory and has had to be amended twice.

Frankly if they had intended to mess it all up, the Parliamentary Draftsmen could not have done a better job!

The most recent changes came with the inappropriately named ‘Deregulation Act 2015’ which also brought in changes to section 21 which I will be explaining later in this series.

This is how it now works:

Protecting the Deposit

When you take a deposit, you need to protect it in a scheme within 30 days of receipt of the money.

There are two possible problems areas here:

• Deposits that are paid a long time before a tenancy starts, and
• Situations where landlords allow tenants to pay deposits by installments.

So far as the early deposits are concerned – the best advice is to just protect them within 30 days.

Some people assume that as the tenancy has not started yet there is no AST to (as it were) hang the need to protect on. However as soon as the tenancy is created you will instantly be out of time. So best to just bite on the bullet and protect.

So far as accepting deposits by installments is concerned this is a VERY bad idea. Each and every installment must be protected within 30 days of payment and many landlords have got into trouble by waiting until all payments are paid. If you must accept installments its best to do this with the rent rather than the deposit.

Serving the Prescribed Information

Prior to the Deregulation Act we had a ridiculous situation (following on from the Superstrike Case) where landlords had to keep serving prescribed information forms whenever the tenancy was renewed, e.g. as a periodic tenancy.

Thankfully the Deregulation Act changes stopped this nonsense. However, you still need to be careful to serve the notice within time.

Remember that it is the information that is prescribed not the form – there is no actual prescribed information form. So, you need to be careful to ensure that all the information is actually provided.

Serving a copy of the certificate and your scheme’s leaflet will satisfy most of the requirements but not all. For example, you also need to tell the tenant the clauses in your tenancy agreement which set out the deductions you are entitled to make from the deposit.

For this reason, it is best to use a properly drafted legal form so nothing gets overlooked – suitable forms are provided by TDS and the DPS and I also have one for my Landlord Law members.

What if it all goes wrong?

The problem about failing to comply with the rules is that you cannot then serve a valid section 21 notice until you are compliant – which includes refunding the money to the tenants.

If you are ever in this situation, I have prepared a Legal Kit which you can read about below, which explains the law and gives step by step guidance.

Tenants are also entitled to bring a claim for up to 3x the deposit sum if you breach the rules. So, it is best to comply so they have no chance to do this.

Further information:

Probably the best source of information is the website for your scheme.  This will have guidance, the scheme terms and conditions and helpful articles.  The schemes also have free telephone advice lines – you can find the number from your scheme website.

The websites are

• TDS
• The DPS
• My Deposits

On my Landlord Law site, I have a lot of help for members on deposit issues, including a ‘compliance checker’ trail you can follow to see if you have complied with the rules, a long article explaining the prescribed information and a prescribed information form you can use.

Members can also ask me ‘quick questions’ in the members forum area.

You can find out more about Landlord Law here.

If you forget the protect the deposit in time, my Deposit Error Repair Kit has step by step guidance to help you comply with the law and serve a valid section 21 notice.

Next time I will start looking at section 21 and the complicated rules that now apply.

Tessa Shepperson is a specialist landlord & tenant lawyer and runs the popular Landlord Law online information service.

To see all the articles in my series please Click Here

Additional course below:

Landlords – if you want to avoid legal problems, penalties and fines, this online course is just the job Please Click Here

The course will have a special 30% discount for PP118 readers via a coupon due to expire in 3 weeks time.

The post Dealing with Deposits appeared first on Property118.

View Full Article: Dealing with Deposits

Tenants of National Trust properties facing huge rent rises…

admin    Uncategorized     agents

Ground Rents:

The National Trust has told one of its tenants – an 87-year-old man – that his rent payments will go up from £148 to £15,000 per year, according to a recent report in The Times.

The Trust has told hundreds of tenants in its leasehold properties around the country that they are facing ground rent increases approaching 10,000 per cent.

The charitable organisation has around 5,000 homes on its land which it rents to over 10,000 people, most of them currently rented on monthly rent payments, but some leases were sold as long-leaseholds, mostly of 49 years’ nominal duration, and with an affordable ground rent.

However, as the lease lengths diminish and the tenants apply to extend their leases, the trust is saying they must accept an increased charge or pay tens of thousands to “buy up” the higher ground rent.

In his case the 87-year-old leaseholder would have to find £78,000, and around 300 people could find themselves in a similar position.

The issue surfaces as Government ministers have pledged to ban “feudal” leases with quickly escalating ground rents, a practice which is increasingly being used by building companies when they sell new homes, oftentimes to unsuspecting young buyers.

A spokesman for the National Trust told The Times that some long leasehold tenants had not been aware of how “Modern Ground Rents” work and the trust is “working to find a fair solution” with a 50 per cent reduction in “relevant cases”.

“We know that some leaseholders feel they have been misled as to the impact of modem ground rents. If we are satisfied that that has happened then we will consider foregoing modern ground rent altogether,” it added.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Tenants of National Trust properties facing huge rent rises… | LandlordZONE.

View Full Article: Tenants of National Trust properties facing huge rent rises…