Landlords embrace tenancy deposit protection

Landlords and agents are embracing mandatory tenancy deposit protection, which became law on 6th April.

To date thousands of deposits have been protected with Tenancy Deposit Solutions Limited (TDSL), and early signs are that the numbers are increasing. In addition, thousands more deposits have been prepaid and block-booked by portfolio landlords.

David Salusbury, chairman of TDSL, says: “At first it looked as if many landlords could have missed the new legislation. This might have been partly because the government’s campaign to publicise the changes in the law appeared to taper off sooner than we expected. There is also some evidence that tenants in general did not know about the new regulatory regime, despite the fact that it is designed for their benefit”.

But now the message seems to be getting through. May and early June has seen a groundswell of activity from both landlords and letting agents as deposits taken in respect of new tenancies are protected. Landlords and agents are finding the TDSL scheme particularly attractive as it lets them hold deposits themselves, it is simple to use, and the pay-as-you-go fee structure is modest – and all the fees are tax-deductible against rental income.

In response to this build-up of activity TDSL has hired extra staff to meet strong demand from landlords and agents wishing to register for the TDSL insurance-backed scheme and to protect deposits. So far, 77% of registrations have been for landlords and 23% for letting agents, with most transactions carried out online using straightforward registration and fee –protection procedures.

David Salusbury says: “Landlords need to be aware of the legislation and take action. The penalties for non-compliance are heavy. If landlords are in breach of the law, the courts can order them to pay to the tenant a penalty of three times the amount of the deposit. Furthermore, failure to protect a deposit can compromise a landlord’s ability to gain possession of a property through the courts. With potential repercussions of that magnitude, ignorance of the new law is definitely not bliss.”

Landlords and agents can register with Tenancy Deposit Solutions and find out more by visiting the TDSL website mydeposits.co.uk.