Legal help, services and support for private residential landlords
Tessa’s Ten Top Tips on Tenancy Deposits
Where the deposit is for an assured shorthold tenancy or residential license – no more than five weeks worth of rent can be taken as a deposit, or six weeks if the tenancy has an annual rent of over £50,000 pa. Any excess will be a ‘prohibited payment’ under the Tenant Fees Act and penalties will apply
All deposit money paid to landlords in respect of Assured Shorthold Tenancies MUST be protected in a government-authorised tenancy deposit scheme.
Landlords must also serve prescribed information on tenants as well as protect the money in a scheme – the service of the prescribed information is as important as actually protecting the money in a scheme and there are similar penalties for default.
Deposits paid in respect of other occupation types, such as company or other common law tenancies or by residential licensees or lodgers, do not need to be registered in a scheme.
Remember that the deposit money belongs to the tenants. For this reason it is essential that there is a clause in your tenancy agreement authorising you to make deductions. The lack of this is a common reason why landlords fail at adjudication.
If the deposit has not been protected in a scheme AND/OR if the prescribed information has not been served, tenants can apply to the County Court for a penalty payment to be awarded of between 1 and 2 times the deposit sum.
Failure to protect the deposit money (for an AST) will mean that any section 21 notice served is invalid. Unless either you have repaid the deposit money to the tenants or the tenants have brought a claim for the penalty which has been resolved by court order or by settlement.
It is important that you have a really detailed inventory / schedule of condition showing all the items in the property and their condition. Otherwise you will find it hard to prove that any damage was done by tenants if making a claim at adjudication. Ideally the inventory should also include details of the property condition – such as walls, doors and windows etc.
Keep all receipts and invoices for work done and replacement items purchased for the property after damage done by tenants if you want to make a claim. However be aware that you cannot claim for damage which can be classed as ‘fair wear and tear’.
If there is any dispute with the tenant regarding deductions from the deposit, make sure you comply with the requirements of your tenancy deposit protection scheme within any time limits they may have set. Be sure to provide all details to prove your claim and don’t expect the adjudicator to be a mind reader! If you don’t tell him something he will not take it into account when considering you case.
Make sure that you always take the correct deposit amount by using our handy calculator (which you can instal on your own website)