In 2007, the government introduced a compulsory deposit protection scheme as part of the Housing Act 2004.
Initially, it seemed uncertain if landlords with existing tenants who had moved in before 6 April 2007 would be affected.
Now, under section 32 of the Deregulation Act 2015, all deposits received before 6 April 2007 for tenancies that have since been renewed, must be protected under one of three government approved schemes. Landlords who have had tenants for several years, where the agreement keeps rolling over, are those most likely to be unaware of the rules.
Buy-to-let landlords are now rushing to meet official “deposit protection” rules before the cut-off on June 23rd 2015. If they fail to do so, they have been threatened with the risk of paying unlimited penalties. With the deadline looming, official deposit schemes have reported a surge in registrations; MyDeposits (one of the three schemes) said the number of new deposits being registered had increased sevenfold.
Fines for failing to register a deposit in an approved scheme are uncapped and are calculated at three times the initial deposit.
It serves landlords well to know that at the end of the tenancy agreement, you must return the deposit within 10 days of agreeing the sum to be refunded. If there is a dispute, the deposit will be protected in the deposit protection scheme until the dispute is settled.
For further help and information, the government website does offer clear guidance for landlords.