Don’t pay the price of failing to deregister tenant deposits

Letting agents should be aware of the financial implications of failing to deregister tenant deposits after Propertymark reveals it is the most common cause of accounting discrepancies among its membership.

A recent routine check of members’ client accounts found that 26 per cent of those scrutinised had discrepancies relating to deposits that had been returned to tenants, but not deregistered. The biggest was £800,000 which would have meant the agency paying almost £5,000 in unnecessary protection fees.

Agencies are invoiced annually by their protection scheme based on the number of registrations and with larger agencies holding deposits totalling tens of thousands of pounds, the potential financial implications are clear.

Deregistering as a business process

Letting agents have almost 200 pieces of legislation to contend with, not to mention a conveyor belt of day-to-day issues with the properties on their books. Deregistering a deposit is not a legal requirement so it is not surprising it can slip down the to-do list or off it altogether.

However, it has been a legal requirement for tenant deposits to be registered with a government-approved scheme since 2007 and letting agents should have the deregistering of tenant deposits ingrained in their business processes.

Lifecycle of tenancy deposits

The Tenancy Deposit Scheme (TDS) sees around 20 per cent of all the registrations they invoice agents for every year end up being for already returned deposits. Their Lifecycle of a Tenancy Deposit guide explains the process to help agents understand the lifecycle of deposits to avoid penalties and disputes. 

Propertymark’s compliance team carry out regular sample checks in addition to the accounting rules and regulations that members are expected to follow.

We advise all members to instil deregistering deposits into the process of concluding a tenancy, not only as good housekeeping but also to avoid unnecessary costs if the discrepancies are not picked up before they pay their annual protection fees.

David Oliver Compliance Manager | Propertymark