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New deposit protection for tenants in England and Wales

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by Elaine Frei

New deposit protection for tenants in England and Wales

Beginning on 6 April, most private tenants in England and Wales will have their rental deposits protected so that landlords cannot withhold return of the deposits when they leave a rental. Three schemes will be available and all landlords will have to be secured by one of the three. If this is not done, the landlord will not have the right to evict assured shorthold tenants with two months notice after the expiry of the six-month tenancy.

One of the schemes will hold the deposit directly, while the other two provide insurance for the return of the deposit if the landlord does not return it. Disputes under the new program will be handled by a dispute resolution service or by the courts. In a dispute, the direct deposit scheme will hold the deposit until the issue is resolved. The two insurance schemes will pay the deposit to the tenant in cases where the landlord absconds with the deposit money or refuses to abide by the resolution dictated by the resolution service or the courts.

If a landlord takes a deposit but does not put it into one of the three schemes, besides losing the right to eviction, he or she could also be ordered to repay the deposit to the tenant or the deposit could be ordered into one of the schemes, and the landlord will be assessed a fine totaling three times the value of the deposit. The fine would be paid to the tenant rather than to the government.

While the government contends that most landlords deal fairly with their tenants, housing charity Shelter claims that over three-fourths of the tenants who had their deposits withheld last year felt they had not been treated fairly.

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News posted: March 6, 2007

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