I Haven’t Protected My Tenant’s Deposit, What Should I Do As A Landlord?

It is a legal obligation that, if you take a deposit from your tenant, it is placed in a government authorized Deposit Protection Scheme within 30 days of receipt. This has been in force since 2007 and now applies to all tenancies regardless of when they started.

You also need to inform your tenants fully of the details of their deposit protection within 30 days of receipt.

If you do not protect your tenant’s deposit, there can be serious consequences. Your tenants could take you to the county court, which could order you to repay the deposit or to place it in a scheme within 14 days.

The court can also order you to pay damages of up to three times the amount of the deposit, and can decide that the tenants do not need to move at the end of the tenancy.
You also cannot serve a Section 21 Notice to regain possession of your property at the end of a tenancy if you have not complied with Tenancy Deposit Protection (TDP) Scheme legislation. In this situation, you would have to show legitimate grounds for evicting your tenant(s) with a Section 8 Notice.
If you have failed to protect your tenant’s deposit within 30 days, there is no way of rectifying this mistake which will fully protect you from legal consequences.

The wisest option in this situation would be to pay the deposit into a TDP scheme as soon as possible. This would still leave you liable to court action, but a judge may decide to be lenient in light of the fact that you did try to fix the problem and, therefore, lessen the damages to be paid.

It is necessary to note that if you are using a letting agent and they fail to protect your tenant’s deposit, as a landlord you are still responsible. This is highlighted by the case of a landlord who had given his tenant’s deposit to a letting agent, but when it came to the end of the tenancy, the agent no longer existed.In this case, the landlord was held liable and ordered to pay three times the original deposit (£1950) in damages plus costs.

Therefore, you should make sure that your letting agent is part of a regulated Client Money Protection Scheme, and insist that they give you details of the TDP Scheme they have used within 30 days, just as they are supposed to do with the tenants.