Residential letting is subject to many complex laws and regulations and making mistakes, even apparently minor ones, can be very costly for landlords.
In particular, there are a number of rules that apply to the protection of tenants’ deposits which, if not followed to the letter, can leave landlords open to serious penalties, according to letting experts, Leaders.
Leaders’ Technical & Compliance Director, Carole Charge, explains: “Most landlords are aware they are legally required to register and safeguard their tenant’s deposit within a government approved scheme within 30 days of receiving the money.
“But what many may not realise is that they (or their agent if they are using one) must also provide the tenant with ‘prescribed information’ which details which scheme the deposit is registered with; who is holding the deposit; how much the deposit amount is; who paid the deposit; and the contact details of all parties.
“They are also required to give the tenant a booklet provided by the scheme they are using, giving information about what the deposit scheme is all about and how to go about getting the deposit back at the end of the tenancy.
“If a landlord does not give their tenant all this information within 30 days of paying the deposit they could face serious penalties, including not being able to serve a Section 21 Notice to regain possession of their property.
“A recent case in which a landlord had protected the tenant’s deposit correctly but had failed to provide the deposit scheme booklet to the tenant resulted in the landlord being ordered to return the deposit and pay three times the amount of deposit in compensation to the tenant. This case shows how a minor and apparently insignificant oversight ended up costing a landlord thousands of pounds in fines and legal fees.
“There are now Tenant Deposit Claims services available which encourage tenants on a ‘no win no fee’ basis to claim compensation if the correct procedures are not followed. Landlords therefore need to be aware of the possible consequences of not doing everything 100% accurately when it comes to every aspect of their tenancy.”
According to Leaders, Tenancy Deposit Protection is just one area of many in which landlords can benefit from the expertise of a knowledgeable and professional letting agent. “The regulations surrounding lettings are complex and constantly changing,” says Carole.
“If you don’t have a full and thorough understanding – or if you use a letting agent that is not up to speed and not fully compliant on your behalf - you could face serious penalties.”
A qualified, knowledgeable letting agent can ensure that landlords stay on the right side of the law throughout the letting process and during the tenancy itself.
But ironically, despite the many regulations governing lettings, letting agents themselves are not formally regulated, and any person or organisation can become a letting agent, with no training, qualifications or financial probity. This is particularly worrying at a time when more and more are turning to the private rented sector for their housing needs,” says Carole.
In the continued absence of any mandatory regulation, Leaders advise both landlords and tenants to make sure their chosen agent is a member of a professional body such as ARLA or RICS and that they have Client Money Protection.
It is also advisable to seek additional reassurances such as whether they have qualified staff, a good local reputation and considerable experience in lettings. Leaders have been specialising n lettings for more 30 years and are members of ARLA, SAFEagent and The Property Ombudsman.
For advice you can trust contact your local Leaders branch on 01323 431333.