It is necessary for landlords to follow the correct procedure at the beginning of every tenancy, providing their tenants with a number of different documents and ensuring they have complied with the relevant legislation. Failure to comply with these requirements may have a significant impact on the landlord in the future – both financially and on the ability to regain the property. There were already a number of obligations on landlords, such as a requirement to secure the deposit, but further requirements became mandatory from 1 October 2015.
The documents and requirements are as follows:
One of the biggest issues for landlords is in relation to the deposit. Failure to comply with the legislation will prevent the landlord issuing a notice to evict the tenant at the end of the term (section 21) and can give your tenant the right to sue you for the return of the deposit and up to 3 times the amount of the deposit by way of compensation, which can affect a claim for rent arrears (section 8).
If the tenancy began after 6 April 2007 and is an assured shorthold tenancy landlords are required to protect the deposit in a government backed scheme. This enables tenants to retrieve back their deposit at the end of the tenancy if the property is undamaged and the tenant has complied with the tenancy agreement. Importantly, if the deposit is paid by instalments, the money should be protected as and when each instalment is paid. The landlord should not assume they can wait until the full amount is paid before protecting it.
For tenancies being created now, tenants and landlords should be aware the landlord has 30 days from the day the deposit was paid to secure it and to serve the prescribed information. It is no longer the case that this can be rectified later. If you are a landlord who has not secured the deposit in time or you are a tenant who has not received notification of the security of your deposit please contact one of our landlord and tenant specialists to discuss your options. If the tenancy is an older tenancy different rules may apply and specific legal advice should be sought.
Without following the correct procedure, and providing tenants with all the necessary documents at the beginning, problems are likely to arise at the end of the tenancy: s21 notices are not valid if the relevant information and documents were not provided. This will effectively delay an eviction process by quite some time and in some cases may prevent you being able to evict your tenant at all. Additionally, if a s8 notice is served to evict the tenant on grounds of rent arrears and the deposit is not protected then the tenant could be awarded three times the amount of the deposit together with the return of the deposit by a court. It is likely this will then be deducted from the arrears so the landlord would not receive the amount of rent owed back and it may extinguish the right to possession at all.
If you have any concerns regarding the setting up of a new tenancy or compliance with an existing tenancy please contact Nichola Anderton on 024 7653 1532.