27 Apr

Landlords may face deposit penalties

Landlords may face deposit penalties

Landlords have until June 23rd to register deposits from tenants otherwise they could face significant fines.

All assured shorthold tenancies must be part of the official deposit scheme - even for those agreements with long-term tenants.

Failure to register the deposits within the next two months could mean an average fine of £3,600, so it is vital that buy-to-let investors are aware of the potential risk.

At present, the government is running a 90-day amnesty to allow landlords to register deposits without facing a financial penalty. Once this runs out, landlords will have to pay a fine that is three times the initial deposit paid by their tenants.

It is estimated that one in three landlords have not registered deposits with a protection scheme despite the introduction of the legislation in 2007.

Emma Humphreys, of solicitors Charles Russell Speechly, explained: "Landlords may not use a letting agent, which would notify them of the need to register deposits, and may not have been keeping an eye out for the regulations when they were introduced."

"Of course, there is no excuse for new landlords not complying with the law. But many long-term buy-to-lets where the tenant and landlord have a good relationship may not realise they need to register with a scheme."

The only landlords that do not need to register deposits are those based in Scotland, university lets and those with lodgers.

Richard Lambert, of the National Landlords Association, explained the amnesty could play an important part in helping to clarify the rules for buy-to-let landlords.

"There are now a large number of deposits that need protecting despite not previously needing to be, and it’s likely that many landlords won’t even be aware of what they need to do," he said.

"Landlords who still hold a deposit should protect it if they haven't already done so, which will ensure that you can legally regain possession of a property [if you need to]."ADNFCR-1222-ID-801785314-ADNFCR

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