Landlords risk heavy fines for not protecting deposits

Nearly 300,000 landlords risk heavy fines for failing to protect the deposits of their tenants in a government back scheme.

According to research by the Centre for Economics & Business Research for consumer website money.co.uk, 15% of the UK’s 1.9 million landlords could be fined up to £2,400 for not complying with deposit protection rules.

Cebr found that 284,000 landlords are sitting on an estimated £514 million of unprotected deposits, leaving renters without third party protection and vulnerable to unfair losses when they move.

All landlords are required to put protect the deposits of their tenants in a government backed deposit scheme. This is to stop them unfairly taking money out of deposits for things such as wear and tear or pre-existing damage when tenants move.

The number of protected deposits has almost doubled from 1.7 million in 2009 to 3.1 million.

Despite this, almost one in seven landlords still fail to protect this money in one of the approved deposit protection schemes

Cebr estimates that landlords flouting the rules are earning around £8.5 million a year in interest on deposits that should be protected.

Richard Lambert, chief executive officer at the National Landlords Association, said: “It’s a positive sign that the majority of landlords are properly protecting their tenants’ deposits. We estimate 10% of landlords choose not to take a deposit from their tenant – and therefore don’t need to comply with the law.

“However, this still leaves a small, but significant proportion of landlords who may still be breaking the law by not protecting the deposit. Many may not even be aware that they are legally obliged to do so. Ignorance is no excuse and the courts take a very dim view of those who use this as a defence.”

The NLA exists to help ensure that landlords let property properly and legally – for more information about NLA membership visit www.landlords.org.uk.

Percentage of landlords protecting deposits

Source: Cebr