There has been a recent surge in claims being made by agents on their professional indemnity insurance in relation to tenancy deposits.
Lonsdale Insurance Brokers, specialist insurers for estate agents and lettings agents, believe that such claims are arising from landlords not putting deposits into a deposit protection scheme or providing the prescribed information for the deposit scheme.
In general, a tenant who makes such a claim, often prompted by a no win, no fee ‘ambulance chaser’ firm, will end up winning three times the amount of their deposit. When this happens, the landlord will take this claim to the letting agent, who then in turn claims on their insurance.
Law firm DAC Beachcroft has seen 25% of its claims relating to deposits not being lodged on time during the first quarter of 2018. Apparently, this figure only came to 3% over the entirety of last year.
To prevent such issues from arising, as a landlord you should make sure you are fully aware of what information needs to be provided to a tenant. If you do not, there can also be other consequences, such as the forfeit of any right to serve a Section 21 notice.
At the outset of a tenancy you must provide:
- A gas safety certificate
- An Energy Performance Certificate (EPC) – Remember, this now has to show an energy efficiency rating of ‘E’ or above!
- A copy of the latest government guide: How to rent The Checklist for renting in England
- Confirmation that the tenant’s deposit has been protected, and that the prescribed information has been provided
The best way of ensuring nothing is missed out, or that your tenant cannot claim that this is the case, is by putting together a checklist and getting all new tenants to initial each page and sign at the end, agreeing that all the relevant information has been provided. It is also important to keep a copy for your own reference.