One of the greatest areas of dispute in lettings is the issue of deposits and the fair return of money at the end of a tenancy. An unscrupulous landlord could claim that minor damages justify the non-return of the deposit, which usually amounts to between four and six weeks’ rent.
However, tenancy deposit protection legislation means that any deposit received in relation to an Assured Shorthold Tenancy for rents up to £25,000 a year should be processed through a Tenancy Deposit Protection scheme.
Deposits held in such a scheme are effectively held in trust by a third party (eg The Deposit Protection Service) not the landlord, known as a custodial scheme. The deposit is only released back to the tenant at the end of the tenancy subject to agreement by both parties that a) the tenant’s rent is up to date, and b) that the property is in reasonable condition. Should there be any dispute, then the tenancy deposit scheme’s arbitration service should quickly be able to facilitate an agreement.
Alternatively, deposits may be held in the managing agents account, but covered by a recognised Deposit Insurance Scheme.
Deposit protection is just one of many pieces of legislation affecting landlords, hence the reason why it is not advisable to rent your property without the advice of a professional letting agency to help you along the way.
It is likely that more regulation is on the cards, and there has already been discussion in Parliament about the possibility of licensing not only lettings agents, but also the landlords they serve, as is already the case in Wales. We would certainly support such regulation in the name of professionalism, and for the protection of landlords and tenants alike.
Please feel free to contact one of our Property Investment Managers to discuss any aspect of how you can maximize your buy to let investment, on 01733 563965.