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Landlords warned of new tenant deposit law

3rd January 2007 | back to article listings BACK    print this article PRINT

Buy-to-let investors are being urged to take note of the new landlord rules protecting tenants' deposits due to come into force this coming April.

The National Landlords Association (NLA) is warning all those involved in the industry that the consequences would be "severe" if the new rules designed to give tenants more rights and security were breached.

Landlords have a choice of signing up to a variety of Assured Shorthold Tenancy (AST) schemes, which safeguards all renters deposits from April 6th and the NLA believes it is in their best interests to do so as quickly as possible.

Under the new law, which comes into effect in England and Wales only, AST scheme administrators must be notified once any deposit is paid so that the cash can be protected by the law books.

Should landlords choose to withhold the deposit for breach of the tenancy agreement, they must give details to the letter concerned about the scheme being used within a fortnight.

The laws mean that there will be ample evidence available to resolve disputes between landlords and tenants, which are becoming increasingly common as the numbers of those choosing to rent their homes swells.

Investors' profits will not be affected by the new legal system which acts as an intermediary between the two parties, but failure to sign up to an AST when the law does eventually come into play will mean huge fines up to three month's worth of rent.

"The repercussions of non-compliance are severe. We strongly urge landlords to prepare themselves by selecting a suitable scheme in advance of April 6th," said David Salusbury, chairman of the NLA.

He continued: "Tenants also have a vested interest in familiarising themselves with the new procedures and ensuring that their deposit money is protected when they sign a new tenancy. They must know their rights and insist that the landlord complies."

Statistics from the department of communities and local government in 2005 show that 19 per cent of deposits were only returned in part and 11 per cent were withheld completely. Nearly a fifth of those who did not have their money returned felt that landlords had been acting unjustifiably, demonstrating the need for such a scheme.

Mr Salusbury added: "We recognise that there are rogue operators in the sector, and we want to see them rooted out. It is because of the malpractice of a small minority that the government has decided to act, by introducing mandatory tenancy deposit protection."

This is a press release by Assetz also available at http://press.assetz.co.uk/articles/3196.html. Alternatively, please see our full press release archive.

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