April 6th 2007 changed in the way that landlords and their managing agents are required to deal with tenants’ deposits. Following pressure from tenant groups, legislation came into force which required landlords of all residential properties let out on assured shorthold tenancies to register a deposit with organisations approved by Government.
The registration process must completed within 14 days of the deposit being handed over by the tenant. In addition to registering the deposit the Landlord or managing agent will also ensure that the paperwork set out in the legislation is served on the tenant within the same 14-day period. A number of unlucky landlords have discovered over the past few years that failure to meet either deadline can result in a tenant taking a landlord to court for compensation. This compensation can be a sum equivalent to three times the value of the deposit which in some cases, has completely wiped out any claim a landlord might have for arrears or even wear and tear at the end of the tenancy.
At the end of the tenancy, if there is any dispute over claims for dilapidations, the deposit scheme will provide a free arbitration service. On those rare occasions when a claim for unreasonable wear and tear cannot be resolved between the parties, most managing agents will prepare a claim for submission to the deposit scheme setting out exactly what the landlord requires from the deposit to enable a tenant to meet their obligations. An independent property professional is then appointed by the deposit scheme to investigate both the landlord’s claim and the tenant’s response before making a ruling on how the deposit is to be divided between the competing parties.
Robert Bolwell, head of Dutton Gregory's Landlord & Tenant Team said, "Unlike the small claims court procedure, the informal arbitration service is designed to give both parties a fair chance to put their side of the argument and to avoid the potentially expensive process of litigation and attending court. To meet the running costs of the organisation, landlords of fully-managed properties are asked to make contributions of just £25 for each registration".
As one of the largest specialist firms on the south coast, the Landlord & Tenant team at Dutton Gregory can be contacted during normal working hours on 01962 844333.
