Home Recent Landlord News late deposit protection penalty – How to limit any compensation to the tenant

late deposit protection penalty – How to limit any compensation to the tenant

tenant depositMany members of the British Landlords Association-landlord advice line questions are related to tenant deposit issue’s. We are going to deal with the frequently asked question on tenant deposit. The most popular one is – late deposit protection penalty – How to limit any compensation to the tenant?

Currently what does the law say?

At present landlords must protect a deposit with an authorised scheme within 30 days of receiving the tenant deposit.

If a tenant deposit was received between 6th April 2007 and 5th April 2012 landlords were required to protect the tenant deposit within 14 days of receipt. From 6 April 2012, the period was extended to 30 days as it is currently. It is also now the case that if the landlord received a deposit before 6 April 2007 the landlord must have protected the deposit by 24 June 2015.

I did not protect the tenants deposit in time – how much compensation do i need to pay?

Good question, many tenants think that they will get 3 times the value of the deposit and in addition the deposit back. The law says “upto” 3 times the value of the deposit. The key word is “upto” 3 times. Which does not mean that the tenant will automatically receive  3 times the value of the deposit. It is not often a court awards the full 3 times value of the deposit to a tenant.

If you have failed to protect the deposit in time and the tenant or someone acting for the tenant has contacted you,than you should;

  1. Ask the tenant or their representative to put the request in writing.
  2. IMPORTANT; If a tenant is claiming compensation than you can counterclaim for any rent arrears or damage to the let property. You can claim cost of any notices you may have served on the tenant.
  3. Respond swiftly to the tenants request for the alleged tenant deposit breach.
  4. You can counterclaim from the tenant as stated in No. 2 above. Put the the tenant on notice of your counterclaim should they wish proceed claiming from you.
  5. If you have nothing to counterclaim against the tenant than consider offering the tenant 1 times the value of the deposit and return of the tenants deposit.
  6. If you are a new landlord or a landlord that has only 1 or 2 properties, your submission to reduce the quantum in other words you can say to the court you are not a professional landlord as such the compensation should only be 1 times the value of the deposit. there is case history to support this.

If you are a member of the British Landlords Association you can contact us by email or ring the Landlord Advice Line.

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