Tenants unaware of deposit protection scheme

| June 20, 2012
Tenants unaware of deposit protection scheme

Housing charity Shelter is receiving a higher number of calls from tenants worried about losing their deposit on rented accommodation, despite regulations being in place to ensure this doesn’t happen.

Calls to Shelter’s helpline over rental deposits have almost doubled from 1,764 in 2009-10 to 3,288 in 2011-12.

Problems may arise when a tenant moves out and finds that a landlord is withholding their deposit after falsely claiming that a property has been damaged, or that the landlord has failed to protect the deposit and simply cannot afford to repay it.

This can leave a tenant without the deposit they need in order to move into another property.

The charity warns that many tenants are unaware that landlords are required to place deposits into a protection scheme account within 30 days of the start of the tenancy.

This ensures that a tenant’s deposit is safeguarded even if a landlord becomes insolvent.

Compulsory deposit protection schemes were introduced in 2007 and the rules governing them were strengthened in 2011.

With landlords demanding deposits of around £979 on average, the scheme is designed to offer tenants peace of mind that their money is protected.

A landlord who fails to place a deposit in an authorised scheme can be taken to court and could incur a penalty of between one and three times the value of the deposit.

This money is then given to the tenant to reimburse them for their loss.

Shelter has set up a deposit protection scheme checker, which allows tenants to check that their deposit is safe.

Campbell Robb, chief executive of Shelter, said: “While we know that most landlords do the right thing, some cause absolute misery for their tenants, accusing them of owing thousands of pounds for damage that does not exist or falsely claiming to have protected their deposit and then never returning it.

“Without protection, renters are putting themselves at the mercy of unscrupulous landlords and risk losing their hard-earned money that they paid in good faith.”

A separate report from Shelter and the Resolution Foundation, has revealed an 86 per cent increase in the number of families with children renting homes over the past five years.

The report suggests that this trend will continue, especially in London where renting is expected to overtake mortgaged homeownership by 2020.

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