Four in ten landlords calling a legal helpline have failed to protect their tenants’ deposits.
Some have not even heard of mandatory tenancy deposit protection – in force since 2007.
In many cases, they cannot find a solicitor to act for them.
According to eviction firm Landlord Action, 38% of landlords who call their legal helpline for advice on evicting a tenant have broken the law on tenants’ deposits.
Landlord Action says there is still a major problem with amateur landlords and some agents having very little knowledge of the legislation.
Landlords risk penalties of up to three times the value of the deposit, which is then awarded to the tenant. The landlords also face penalties if their agent failed to comply with the legislation.
Paul Shamplina, founder of Landlord Action, said: “There are too many landlords that still do not know enough about being a landlord and their responsibilities.
“Many are failing to comply with deposit protection rules and this is having a knock-on effect when landlords wish to evict through Section 21. The simple fact is, ignorance will not solve the problem.”
The only way a landlord can legally evict a tenant who will not move out voluntarily and who is not in arrears or in breach of their tenancy agreement is via a court order for possession, but in order to obtain this, a landlord must first return the deposit.
Furthermore, Landlord Action says they are receiving more and more phone calls from desperate landlords who are being sued by their tenants for compensation for not protecting the deposit.
Shamplina said: “It seems to me that tenants are becoming savvier than landlords when it comes to buy-to-let legislation.”
He also said many solicitors are reluctant to take on cases where deposits have not been properly protected, as there is no defence against it and it is purely down to the judge’s discretion.
In response to the rising number of inquiries with deposit issues, Landlord Action has launched a fixed-fee deposit claims mitigation service, to act on the landlord’s behalf in dealing with paperwork and also attempting to reduce the level of penalty the landlord faces.
Eddie Hooker, CEO of MyDeposits, one of the Government approved protection schemes, said: “Landlords and agents should be aware that protecting the deposit with an authorised scheme is only one part of their legal responsibility.
“The other requirement is to correctly serve the Prescribed Information to the tenant, and this is definitely an area where better understanding of the legislation is needed. The majority of legal cases we see surround the incorrect issuing of the Prescribed Information, or failing to issue it at all.”