Landlords have until June 23 to sign up to an official deposit scheme or they may face a fine of £3,600.
Those with long-standing tenants should be aware of the need to officially register deposits by the June 23 cut-off date.
A 90-day amnesty is being run by the Government to allow buy to let investors in England and Wales to place their tenants' deposits into an official scheme.
Fines for failing to do so will be unlimited and calculated at three times the initial deposit. Given that the average deposit put down before moving in is around £1,200 it means potential fines of £3,600 could be enforced.
Around one in three landlords could be affected as that is the number not registered with a deposit protection service according to current estimates.
Importantly, not all landlords are affected by the legislation as university lets and licence agreements are excluded while Scottish landlords are not covered either.
Any landlord with an “assured short hold tenancy” agreement in place should register with one of the three Government-backed schemes available.
Landlords who fail to register will also be deemed to have failed their obligations should a dispute occur at the end of a contract so it is imperative that they act quickly.
Those who have continually running agreements are those who are deemed most likely to be affected as they may be unaware of the new legislation.
Emma Humphreys of solicitors Charles Russell Speechly explains,
“These landlords may not use a letting agent, which would notify them of the need to register deposits, and may not have been keeping an eye out for the regulations when they were introduced in 2007. Of course, there is no excuse for new landlords not complying with the law. But many long-term buy to lets where the tenant and landlord have a good relationship may not realise they need to register with a scheme.”
Most buy to let properties have an “assured short hold tenancy” agreement in place and must register with the Deposit Protection Service, My Deposits or Tenancy Deposit Scheme.
Other schemes exist for buy to let landlords in Scotland and Northern Ireland.