MyDeposits To Automatically Un-Protect Certain Deposits Where Statutory Periodic Tenancy Arises

MyDeposits has announced that it will automatically unprotect some deposits where tenancies turn statutory periodic from the winter of 2013 / 2014 Unless landlords or letting agents take some action.

According to their website:

You will have 30 calendar days from the end of the fixed-term tenancy agreement to update the status of the protection with my|deposits; otherwise, we will automatically unprotect the deposit.

One of the reasons given by the scheme is because:

Since we launched in 2007, many deposits protected with the scheme have not been unprotected at the end of the tenancy. This confuses our Members and their tenants, particularly when dispute resolution is required.

The problem is that at the end of tenancies, landlords and agents are repaying deposits without issues and not going online to unprotect the deposit. This will leave a large number still essentially protected, but where the tenancy has long since ended.

Landlords and letting agents will receive four email notifications before the fixed term ends (as provided when the deposit was first protected). 

Landlords and agents will be required within 30 days of the end of the fixed term to either extend the deposit into a statutory periodic tenancy, end the deposit because the tenant has vacated at the end of the term or end the deposit and re-protect if a new tenancy has been issued. 

There will be no fee for the extension, but a new protection fee is payable if a renewal assured shorthold tenancy is done. If the landlord or agent does nothing, the deposit will become unprotected after 30 days. 

It needs to be clarified from the information whether the deposit is immediately unprotected after 30 days of inaction or sometimes after any notice. Presumably, such notice is required by paragraph 5(3B) schedule 10 Housing Act 2004, which must give information about the determination to cease to retain the deposit under the scheme and the date the deposit ceases to be retained. Under the schedule, that date must not be within three months from receipt by the landlord of the notice [paragraph 5A(7) Schedule 10]. 

Once the deposit has been extended, it will remain protected indefinitely. Given that the majority of tenants stay after the initial fixed term (except most student lets, I suppose), it's unclear how this will help the problem of landlords and agents not unprotecting deposits at the end because now that it's rolling on indefinitely, the position is no different to now. The deposit remains protected forever until the scheme is notified.

View Related Handbook Page

Deposits and Tenancy Deposit Schemes

Many landlords take a deposit from tenants to hold for the duration of the tenancy. When the tenant moves out, this is returned to the tenant less any deductions permitted: typically for damage (above fair wear and tear), additional cleaning, and cover any outstanding rent. Note: deposits can only be withheld if stipulated what the deposit is being held against in the contract.