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How the Localism Act affects Landlords

By Jwallace10 Subscribe to RSS | July 31st 2012 | Views:
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There have been lots of column inches about the impact that the Localism Act 2011 which became law on April 6th 2012 will have and the new obligations any landlord will have to take on board in respect of Tenant Deposit Protection (TDP) legislation. Headline comments have ranged from the positive: "landlords given more time to protect deposits" to the more pessimistic: "landlords expected to pay more yet again". While the Act now recognises the role of the agent in taking and registering deposits, the liability for any errors or omissions remains firmly with the landlord.

The good news is that the amount of time a landlord has to register a deposit through an approved scheme has indeed been increased from 14 to 30 days. This new limit for compliance helps, but the landlord must still provide the tenant with proof of the deposit protection and the prescribed information within that deadline. If the deposit isn't protected on time, the courts will order the landlord or agent to pay the tenant a penalty in addition to ordering the return of the original deposit. If you have registered the deposit after the 30 day limit, even if you registered it on day 31, the tenant may still make an application to the court and the court will make a penalty award and order the landlord or agent to return the deposit to the tenant.

The Act has at least relaxed the regime in terms of compensation for noncompliance. Protecting the deposit late or failing to serve the prescribed information previously lead to a landlord having to pay a mandatory penalty of three times the deposit. Compensation is no longer fixed and will now vary between one to three times the deposit at the judge's discretion.  It's likely though that the bigger the landlord organisation, the bigger the fine will be.

Perhaps the most significant change though is the fact that a tenant can make a claim after the tenancy has ended if they discover that their landlord didn't follow the regulations in respect of their tenancy. If that was indeed the case, there is no possible defence against the tenant's claim and the amount awarded could represent three times the amount of the original deposit.

Landlords should take note that these regulations apply to all tenancies created on or after 6th April 2012 and will also apply to any tenancies  already in existence which have not already complied with the regulations. They also apply to tenancies which commenced before 6th April 2007 but are renewed after 6th April 2012. A majority judgment held that the language of the legislation implied what was important was not the failure by the landlord to protect the deposit within the time limit, but the failure to protect the deposit at all.  Therefore, a landlord could escape any penalty even if he failed to protect the deposit within the 14 day limit provided he did eventually protect the deposit by the date of any court hearing. The regulations now make it crystal clear that if the deposit is registered late (i.e. outside the 30 day limit) a penalty will be awarded – even if the deposit is eventually registered.

If you're a landlord and uncertain about how these changes to the Localism Act affect your tenancies, speaking to conveyancing solicitors or other legal experts could help to clarify the issue for your situation.

Jwallace10 - About Author:
Jesse Wallace writes for a digital marketing agency. This article on conveyancing solicitors has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.

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