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Protecting Deposits - Who's Responsible?

Wednesday, 6th May 2009

Categories: Lettings

Author: Peter Barry

By now most Landlords and tenants are aware that deposits must be protected in one of the authorised schemes within 14 days. The penalty for failure to do so is the payment of an amount equivalent to 3 times the deposit to the tenant.

But who is responsible – Landlord or Letting Agent? The short answer is to sue one of them and you’ll soon find out but let’s take a look at what the regulations say.

Tenancy deposits are covered in Part 6 of the Housing Act 2004. (212 – 215) and it clear that the rules do not just apply to Landlords but also to anyone acting on their behalf:

References to a landlord or landlords in relation to any shorthold tenancy or tenancies include references to a person or persons acting on his or their behalf in relation to the tenancy or tenancies (Section 212(9))

Therefore the responsibility for protecting the deposit would come down to the contractual arrangements between the Landlord and Agent. If the contract (by contract I mean the Agent’s Terms & Conditions rather than the Tenancy Agreement) does not task the Agent with protecting the deposit he should pass it straight to the Landlord, although even if this is not done within the statutory period it will still be the responsibility of the Landlord to protect an equivalent amount in one of the authorised schemes.

If the contract between the Landlord and Letting Agent is such that the Agent is responsible for protecting the deposit on the landlord’s behalf, then the agent would potentially be liable to prosecution if he fails to do so; but by the Landlord rather than the tenant.

Even if such a contractual arrangement is in place the landlord should satisfy himself that the deposit has been protected, and that the statutory requirements have been complied with as it is he, rather than the agent, that will be face the penalty.

Tenants should always pursue the Landlord if a deposit has not been protected – if the Landlord thinks that the deposit should have been protected by the Agent they may have a separate case against them but that does not take away from the Landlord’s responsibility.

Further reading on the Tenancy Deposit Regulations:

Directgov - Tenancy Deposit Protection

Tenant’s Guide to the Tenancy Deposit Scheme