Buy-to-let landlords must register their deposits by June 23 or face fines. Deposits must be registered with one of the three Government- backed deposit schemes; Deposit Protection Service, My Deposits and Tenancy Deposit Scheme. Fines for failure to protect the deposits are unlimited but will be calculated at three times the initial deposit taken.
Landlords who have had tenants for several years, where the agreement keeps rolling over, are those most likely to be unaware of the new rules. Deposit protection was set up as a compulsory scheme in 2007 to mediate disputes at the end of the tenancy.
Below we answer some very common questions:
1) Where should I register deposits, and how much does it cost?
The Deposit Protection Service, My Deposits or the Tenancy Deposit Scheme are the only official schemes in the UK.
Costs range between £0 and £24 per deposit. The paid-for schemes (MyDeposits and TDS) will let you keep the cash during the tenancy, so you can earn interest on this money. The free scheme (The Deposit Protection Service) will hold the money until it is returned to the tenant, minus any deductions.
2) My tenant moved in before 2007. Do I still need to register a deposit?
Yes. Deposit protection rules apply to all “assured shorthold tenancies” regardless of when the deposit was originally taken. This was confirmed in court in 2013.
3) I didn’t take a deposit from my tenant. Will I still be fined?
If you don’t take a deposit from the tenants then this rules does not apply.
4) I let out a holiday home, do I need to protect deposits?
No, you do not need to protect deposits if you rent out a holiday home, because this type of agreement is not an “assured shorthold” tenancy.
5) I rent a room in my home to a lodger and take a deposit. Does this now need to be held in an
This arrangement will normally be exempt from the rules, because lodgers have a different type of tenancy agreement known as an “excluded tenancy” or “licence agreement”. When the landlord and tenant live separately, in most situations this would be considered an “assured shorthold tenancy” and the deposit rules apply.
Landlords and tenants do not decide whether their agreement is “assured shorthold” or not, but it is a legal matter – so it is best to seek advice if you are unsure.