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Article > Tenant Deposits; Accidental Landlord Still Clueless About Law

Article kindly provided by Julie Ford

Hemel Landlord Property Network 07904 288188

When the tenancy deposit scheme was introduced as law on 6 April 2007, it stated that all deposits taken by landlords, or their agents, from tenants on an Assured Shorthold Tenancy (AST) must be protected by a government-approved scheme, it was very much a new concept often not fully understood or backed by landlords and so the media campaign followed, we were bombarded from all sides about the importance of this new law and how we must adhere to the concept, and now over 4 years on you would think that all landlords and agents alike would be fully clued up and the protection of a deposit would just be a process carried out on auto pilot as it is now such common practice.

To my utter surprise I have recently discovered this is far from the case, at the most recent meeting held by HLPN, we had John King from The dispute service addressing the room on the pitfalls of not supplying the right evidence when entering a dispute with the TDS. However this was quickly put on the back burner when a number of attendees, informed us they had not protected their tenants deposits.

One, who claimed to be an accidental landlord, had chosen an agent on a tenant find only service, informed us that they had not protected their tenants deposits because they didn’t know they had too, another couple said they knew of the TDS but did not think it applied to them as they only had 1 property and 1 tenancy and had not used an agent therefore they thought they didn’t have to protect the deposit.

More worryingly was the voice that then came from the back of the room, “ I only protect them if a tenant kicks up a fuss” these pearls of wisdom came from a landlord who on the surface appeared to be a professional property investor, he owns over 200 properties 170 of which have been converted to HMO’s all of his tenants are on AST’s yet he does not protect a single deposit, instead choosing to place the funds in an account which then purchases his next property, he freely admits to only protecting a deposit, if a tenant kicks up a fuss or if they need to serve notice, otherwise the deposits taken go unprotected and are returned at the end of the tenancy providing the room is left in good order and no rent is outstanding.

To my complete surprise and probably most concerning of all, the 1st gentleman had not been advised by his agent of his obligations as a landlord.

This lead me to ponder the idea that there may well be many more landlords in this situation who are blindly unaware they are breaking the law and risking a hefty fine. So how do we tackle a problem that we did not know we had, and who is to blame for this lack of education in throughout the industry.

  • Should agents take responsibility to inform all landlords no matter what service they take out, of their obligations in regards to a tenant’s deposit.
  • Should the onus be on the landlord to educate himself in regards to what is required of him before he ventures into letting out his property.
  • Should the 3 deposit protection companies poll their resources to force the education of landlords
  • Or should the responsibility for the tenants deposit fall to the tenants to ensure they know where the landlord is keeping their money?

The questions in regards to the solution is endless, and would spark a healthy debate, however more importantly is finding the solution to this ever increasing problem and knowing where to look for the information.

Just like being back at school, you only knew you needed to be taught something because your teacher taught you it, but to my knowledge there is currently no Landlord School, so where can a person who finds himself left with a property, possibly following the death of a parent or from the split from a partner go to be educated about all the legal points he must do before he can rent out his property to an tenant who expects you to know what you’re doing?

This is hard, ideally a landlord should be furnished with all the info he needs from the agent he instructs no matter how smaller involvement they have, but what if a landlord decides to take on the entire process themselves, from the advertising of the property using the small ads in the back of the local paper to the move in day, and all the bits in between that they have no idea is even required, for example

  • Referencing tenant – not a legal requirement but definitely a must
  • EPC
  • Gas safety legislation
  • Drawing up accurate tenancy agreements that adhere to current legislation
  • Protecting the deposit
  • Inventory and move in report – again not legally required but still extremely important
  • Regular property inspection – a must to ensure your tenants are looking after your property
  • What to do if the tenant defaults on the rent
  • The correct landlord insurance
  • Do you take rent guarantee
  • Serving notice
  • The Eviction procedure

All these things need to be considered before a landlord can venture into letting out his property, and as more and more people are finding it impossible to buy or sell and turning to renting as the answer to their problems, the lack of available information may inevitably be the downfall of the rental market as we know it, if the increase in accidental landlords is anything to go by then we must assume that the number of deposits currently protected correctly is only scratching the surface in regards to the actual number of tenants paying deposits to landlords who have idea the Deposit Protection laws even exists.



About the Author

Julie Ford runs the Hemel Landlord & Property Network

The network is predominately designed for landlords and property investors, we offer advice and guidance on all aspects of buying, selling, renting and managing your property, whether you are a 1st time landlord or a seasoned investor The Hemel Property Network has all the tools you need to help you make the most of your investment.

We meet Last Thursday of the Month, at 19:00 and encourage our guests to arrive early so that you can get to know your fellow property networkers.

Next HLPN Meeting:

Thursday 27th October 2011 @ 6.30pm
Guest Speaker: Paul Shamplina - problem tenants and evictions
Venue : Holiday Inn Express, Stationers Place, Hemel Hempstead, Hertfordshire HP3 9RH




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