Landlords: deposit protection clarity stops "windfalls"
- 23rd November 2010
- Landlord Property News
The date by which a landlord needs to protect a tenant's deposit has been clarified by the Court of Appeal.
This follows legislation that landlords must enter their tenants' deposits into an approved deposit protection scheme or risk paying a severe penalty.
Such legislation first came into place because of a long-running outcry by tenants that their deposits were going missing or being absorbed into 'refurbishment' costs at the end of their lease, leaving them with little legal standing to try and claim their deposits back.
Under the new rules, if a deposit is not protected then a landlord will have to pay their tenant up to three times the cost of the initial deposit. However, although this was set up for the purpose of protecting tenants from unscrupulous landlords, some landlords have complained about the tables being turned.
There have been many reports in which landlords claimed to be suffering under the new legislation. These claims suggested that some crafty tenants were taking advantage of the new rules and benefitting from having a landlord who was disorganised or not in the know about deposit protection, receiving significant 'windfalls' as a result.
In a test case backed by the RLA, the Court of Appeal ruled that a landlord must have protected the deposit under one of the three approved schemes and given the required information to the tenant before a court has heard the claim.
The judge argued that this clarification would ensure the protection of landlords and tenants, and would avoid future improper interpretation.
It is expected that a number of landlords who have already paid such penalties to tenants will now seek legal advice about claiming it back.
RLA Policy Director, Richard Jones: "the penalty provision was always intended to ensure that the deposit is properly protected and to give the tenant a way of compelling his landlord to comply."
...This ruling is a victory for common sense.
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