Despite the deposit protection scheme imposed by the Government, new research from the Centre for Economics and Business Research has revealed that approximately 284,000 residential landlords in the UK have not placed the deposits paid by their tenants into an official protection scheme. This is a legal requirement, and the report shows that landlords that have failed to protect renter’s deposits are sitting on £514 million that should be protected by an official third party service.
There are currently 4.6 million privately rented households, with the average protected deposit standing at around £1,040. The total value of deposits paid by tenants and placed in protection schemes by landlords is now in excess of £3 billion.
Landlords that do not comply with the scheme run the risk of fines. At the present time, 15% of landlords are failing to protect their tenant’s deposits and could face a penalty of £2,400. The unprotected funds could collectively earn up to £8.5 million annually and leave landlords and tenants with no protection when tenancy agreements reach their end.
The purpose of the schemes was to prevent landlords from taking money from deposits for pre-existing damage and wear and tear. The major advantage they offer is that in the event of any issues an alternative dispute resolution scheme can step in, assess the situation and ensure that any money the landlord is holding back is justified and fair for the tenant.
Landlords who do not comply are undoubtedly leaving tenants vulnerable, but the schemes also benefit the landlord and protect them from tenants that do not take care of their properties. Placing deposits in a protection scheme can save a great deal of frustration and conflict later on, and is in the best interests of both parties.
We provide premier property management for properties in Ealing and throughout the rest of London, and we ensure each of our landlords and tenants are protected. Our proficient property specialists provide a high quality service and we make sure all landlords are in full compliance with deposit protection schemes, reducing the risks of conflict further down the line.