British tenants beware; renegade landlords and letting agents are exploiting rental deposit protection law loophole

A loophole within the rental deposit protection laws in the UK is allowing renegade landlords and letting agents to shaft tenants in the country out of tens of thousands of pounds in lost deposit repayments.
Under current regulations, landlords in England and Wales are legally obligated to put the deposit money paid to them by their tenants into one of three government backed schemes. Once their renters tenancy period comes to an end, both parties are entitled to either come to an arrangement about how much of the initial deposit is returned, based on the state of the property, or open formal dispute proceedings so that an external party decides how much money should be returned to the tenant. 
And as specified by the regulations decreed by the government, all three of the insurance-based deposit schemes are expected to remove members who break these rules, though it is this reality which is being exploited by landlords to retain their tenants deposits in an unethical and unfair manner.
This is because the ëmemberísí which are typically expelled from the schemes due to misconduct are landlords- the very individuals who renters require protection from in the first place. Thus, a landlord could come to an initial tenancy arrangement with a renter which protects their deposit, but could then intentionally be expelled from the insurance scheme where it is held, removing the safety net that the tenant enjoyed previously on their deposit and changing it from being protected to unprotected. 
The loophole has been utilised by a number of landlords across the country with many making full use of the opportunity to exploit the unprotected deposit situation to shaft tenants out of thousands in unreturned deposit repayments. 
The reality of the existence of this loophole, and the levels in which it is being used by landlords to exploit their tenants is particularly alarming considering the housing situation in the UK at present and the likelihood that the rental private sector will expand immeasurably in the next few years as a generation of young people in the South East and London struggle to attain a foothold on the booming property market. 
ëEasy prey for unscrupulous landlordsí
The regulations devised and implemented into law by the Department for Communities and Local Government (DCLG) clearly outline that any insurance-based schemes are obligated to end memberships if any party involved breaks the rules. The existence of this clause is because without the ability to remove members, insurance-based schemes would not have the logistics to purchase the relevant insurance for their service. 
Tenantsí rights organisation Generation Rent have urged the government to address and remove the loophole, in order to provide protection to those in the private rent sector from rogue landlords and letting agents who appear to be working collectively to maximise their gains from their clients. 
“More than two-thirds of renters have no choice but to rent privately, which means they are easy prey for unscrupulous landlords and letting agents who enjoy Wild West levels of regulation,” says Generation Rent spokesperson Alex Hilton. 
“What regulation there is now appears to be flawed. The nine million people living in the private rented sector deserve a market that works for them, instead of exploiting them.” 
The issue of deposit repayments within the private rent sector has been a longstanding problem for tenants, who are usually asked to pay a lump sum of around 4-6 weeks rents upfront to their landlords at the start of their contract in order to cover any repair work or late payments that may happen in the future. However, the costs of cleaning and minor repair work are often used as excuses by landlords to retain the entire or most of their tenantís deposits. 
The existing deposit protection laws were first instigated back in April 2007 and clearly outline that all landlords or letting agents utilising an Assured Shorthold Tenancy (AST) arrangement are required to begin protecting deposits paid to them within 30 days of obtaining the cash. In the case that a disagreement arises between the tenant and the landlord, the latter must pay the former all of the money from their deposit which is not being disputed, with the rest being held in the scheme until a resolution or an arrangement is reached for the remainder of the deposit sum.
Matt Hutchinson, director of flat and house share site, says: “As with most rental legislation, the scheme is intended to protect tenants against the rogue element, which is far smaller than most people think. The main thing for landlords to remember is that deposit money isn’t theirs, it belongs to the tenant, wherever it’s kept.”
Statistics released last year illustrated that just 1.3% of deposit agreements end up going into dispute, whilst over 50% of these cases do not produce a clear ìwinnerî- the majority of situations result in the money being divided by both parties. The most frequent cases were identified as being over decorative disputes, such as the degree of repair and 
cleaning work that needs to be undertaken and paid for by the landlord. 
Housing minister, Kris Hopkins, accepted that the loophole is causing problems in the country at present, but sought to stress that tenants can take cases when a landlord is attempting to exploit its existence to court, where they could be entitled to compensation totalling three times the deposit.
Hopkins said:  “Where a deposit has not been properly protected, tenants are well within their rights to take court action where a judge could require the landlord to pay up to three times the deposit”.
Top tips for tenants to protect their deposits
If you are currently renting a property anywhere across in England or Wales, then you will need to keep a number of things in mind in order to ensure that you never find yourself in the exploitative situation that many of your counterparts are experiencing at present. The fundamental information that you will need to establish right from the outset of your tenancy arrangement is whether your deposit is protected and you should check with the scheme you have been registered on regularly to check whether your landlord is being honest or if they have intentionally be expelled. 
The unfortunate reality is that landlords have the power to decide which deposit scheme is utilised,  instantly putting renters into the dark about the status of their deposit, despite the fact that landlords are legally obligated to outline the precise manner in which it is protected and any other important ìprescribed informationî. 
The three websites to visit if you are a tenant in England and Wales are:, and  
You should find out which scheme you are on from your landlord and then identify whether your deposit is protected on the relevant pages on the aforementioned sites. If you find that it isnít, then the first measure you should take is to formally write to your landlord highlighting your grievances, and give them the opportunity to remedy the problem. If they carry on neglecting to abide by the regulations, then keep in mind that you can now take them to court and attain a compensation payment totalling almost three times as much as your initial deposit. 
And if your landlord tries to evict you as a result of bad-blood incurred from the dispute, remember that they cannot utilise a ìsection 2 1 ìno faultî notice to remove you until that time that you have received your deposit back in full, or a dispute has been resolved. 


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