Must a residential landlord take a deposit?

by Kidd Rapinet on November 9, 2021
Graeme Bellenger

Legally, a landlord does not need to take a deposit. But most do so as comfort in case a tenant damages the property or fails to pay rent.

If property damage or unpaid rent exceeds the amount of the deposit, the landlord can seek a County Court Judgment against the tenant. Tenants should avoid having a CCJ registered against them, as it will affect their credit rating.

If a landlord sues for damages of under £10,000, the matter will be allocated to the Small Claims Court, which hears modest value claims and often parties are unrepresented by lawyers. Wins or lose, the general rule is that each side pays their own legal costs.

If a landlord takes a deposit it is critical to register it in a Tenancy Deposit Scheme within 30 days of receipt and serve the deposit certificate on the tenant, together with the “Prescribed Information”.

If the landlord does not register the deposit and serve the Information, then the tenant can make a claim against the landlord. There is no defence to a valid claim and the landlord will be ordered to repay the deposit and compensation between 1-3 times the value of the deposit! The tenant may be awarded their legal costs even if the claim is for under £10,000.

So it’s prudent to take a deposit, but protect it immediately, or be prepared for your tenant to make a claim against you!

Properly managing your property, an expensive asset you have worked hard to acquire, shouldn’t be handled casually. It’s important to have a well-drafted Assured Shorthold Tenancy Agreement (AST) and to serve all the information required by statute.

This article has been brought to you by Graeme Bellenger,  a litigation solicitor and the managing partner of Kidd Rapinet, Canary Wharf.  He specialises in residential and commercial property, together with employment law.

These materials and content have been prepared for the benefit of their viewers/readers. They are intended for marketing purposes only and are of a general nature and do not constitute legal advice applicable to any particular facts or circumstances. Kidd Rapinet LLP and/or the author(s) accept no duty of care, responsibility or liability for any loss or damage which you or any third party may suffer as a result of any reliance or use by you or they of these marketing materials and content, except to the extent it is not legally possible to exclude such liability. If you require legal advice on your own situation, please contact us so we can discuss how we may assist.

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