April 30

Deposit protection service and the localism bill

I thought I would take a couple of minutes of your time to go through a couple of points with you, one being the Deposit Protection Service and two the Localsim Bill.
I am sure that all of you are aware of the DPS – Deposit Protection Service, this is the service that holds your tenants deposits on their behalf until the end of their tenancy. There are a couple of other insurance based schemes where the landlord or agents hold the money and they are insured against any loss. I chose the DPS based on previous experiences and the relationship that I have built up with them in my previous positions.
The DPS offer the tenants a free arbitration service should they disagree with our end of tenancy findings, they also offer a Single Claim process, whereby if the tenant has left the property leaving no forwarding address or other means of contact Ezytrac can initiate this claim for whatever amount we require from the deposit and the DPS then try and contact the tenant – if there is no reply from the tenants then they will award in Ezytrac’s favour.
The deposit protection service and their T & C’s are incorporated into our tenancy agreement and all new tenant’s paperwork so you will see that we cannot use any other deposit service, we also do not advocate any other service. To that end if you wish to use any of the other service available then you will need to send us your own tenancy agreement and prescribed information, if you do not do this then we will automatically register the deposit with the DPS and send them the funds to hold for the life of the tenancy. Nor can we get involved with the repayment of the deposit from your chosen scheme.
I would also like to draw your attention to the Localism Bill which became live this year:
Even now, some landlords are still blissfully ignorant of the fact that, since April 2007, the law has required them to protect any deposit taken in relation to a residential tenancy agreement and to provide the tenant with prescribed information about the protection of the deposit.
Penalties for not complying with the legislation are, on the one hand, that the landlord can be found liable to repay the deposit to the tenant and pay a penalty to the tenant equal to three times the amount of the deposit and, on the other hand, the landlord is prevented from serving a notice pursuant to Section 21 of the Housing Act seeking possession of the property.
However, the effect of a Court of Appeal decision in late 2010 was that a landlord had up to the point at which a Judge gave judgment against him in a claim for the repayment of the deposit and payment of the penalty in which to protect the deposit and provide the prescribed information. 
This decision defeated the purpose of the legislation in the first place, and it meant that, in some cases, the landlord would not protect the deposit until it suited them or not at all. 
This loophole has now been plugged by changes in the law expected to come into force in early April 2012. These changes will affect all tenancy agreements where deposits are taken and situations where deposits have already been taken, where the existing requirement has not been complied with.
One change to be introduced is that deposits will have to be protected and the prescribed information provided within 30 days of receiving the deposit. 
Failure to comply with either requirement within the time limit will mean the potential liability to pay a penalty of between one and three times the amount of the deposit but the key difference now is that there is no provision within the rules allowing this time period to be extended.
The rule preventing the service of a Section 21 notice to quit remains, so long as the deposit is being held and it is unprotected. The right to serve a notice can only be regained if the deposit is returned.
Crucially, liability to pay the penalty will remain, even if the right to serve the notice is regained.
To extend the risks faced by non-compliant landlords, penalties for failing to protect the deposit can now be claimed even once the tenancy has ended, up to a period of six years from the point of expiry of the 30 day period, even if the deposit has been refunded.
The consequences of breach of the amended legislation are severe and impact on the landlord’s wallet, as much as their ability to get back their property. It is therefore more important than ever that landlords have regard to their legal obligations before entering into any tenancy agreements.
As a landlord with Ezytrac, you do not need to worry about any of the above as we do it all for you. We ensure that all the relevant paperwork is signed when the tenants collect the keys to your property!
Please do let me know if you have any questions on this or any other matter.


You may also like

{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}


Chat to the Team

We're always ready to provide our thoughts. Enter your details and we'll return your call or simply call (+44) 01522 503 717