Landlords will face tougher penalties if they fail to protect a tenant’s deposit in a government-approved scheme under new legislation that comes into force on Friday.

The new rules aim to tighten up loopholes in previous regulations affecting tenancy deposits that enabled landlords to avoid paying penalties for not safeguarding a tenant’s deposit.

From April 2007, laws were introduced that meant all landlords taking new deposits for assured short-term tenancies in England and Wales had to use one of three government-authorised deposit schemes: TDS, MyDeposits and Deposit Protection Scheme.

The legislation also included tough sanctions, with tenants able to go to court and claim a penalty of up to three times their deposit from their rogue landlord.

However, changes have been made to close a legal loophole in the Localism Act, which saw some landlords successfully appeal against penalties for failing to protect a deposit.

While landlords will now be given a longer period of 30 days - up from 14 days - to put a tenant’s deposit in an approved scheme after receiving it, changes to the law will now make penalties strictly enforceable, said David Salusbury of the National Landlords Association.

The longer period will mean that landlords and letting agents can no longer blame administrative problems for any delay in protecting a tenant’s deposit. If they have not protected the deposit within 30 days, they could be liable for penalties. The fine is between one and three times the deposit amount, rather than the fixed three times penalty previously.

Tenants will also now be able to make a claim even after they have moved out of the property, and for up to six years after if their landlord failed to protect their deposit within the 30 day period. Landlords will no longer be able to retrospectively protect the deposit as they were allowed to do so before.

The new rules will apply to all new tenancies started on or from 6th April, while those landlords with tenancies already in place will have 30 days to meet the requirements.

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