Landlords 'must use an official tenancy deposit scheme'
Posted by Lucy Wooldridge
wners of buy-to-let properties must make sure they use a recognised deposit scheme to make sure the money is kept safe during the tenancy, legal experts have warned.
Landlords can either do this themselves or use professional property management services to ensure issues such as this are taken care of.
The warning come from Danny Revitt and James Parden, experts in landlord and tenant issues from national law firm Irwin Mitchell, who were responding to readers' questions in an article for the Daily Telegraph.
One landlord wrote in to ask if he was breaking the law by keeping his tenants' deposits in his savings account six months after they had moved in.
"If you take any money from a tenant as a deposit, it is your statutory duty as a landlord to place it in one of the government-backed schemes. Failure to use this statutory procedure could affect your right to end the tenancy and take possession," they responded.
The experts warned that, should a landlord serve the tenants with a notice to terminate an assured shorthold tenancy in accordance with Section 21 of the Housing Act 1988, it could be invalidated if the landlord has failed to fulfil their legal obligations by protecting the deposit.
Furthermore, the Housing Act 2004 allows tenants to bring claims against their landlords for failing to comply with their statutory duty.
"If you fail to protect the deposit and the matter proceeds to a court hearing, the court can award your tenant a refund along with damages," said the two lawyers.
"But as a landlord, you should be able to avoid liability by placing the deposit into such a scheme before any hearing."
There are currently three government-approved schemes which landlords can use - Deposit Protection Service, MyDeposits and the Tenancy Deposit Scheme.
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