Government to ban landlords from holding tenant deposits
Original Article Summary
Landlords and letting agents will no longer be permitted to hold tenants' deposits in their own bank accounts under reforms planned by the government. Housing minister Matthew Pennycook has confirmed plans to abolish insured tenancy deposit schemes, requiring all deposits to be held within custodial schemes managed by approved deposit protection providers. The post Government to ban landlords from holding tenant deposits appeared first on PropertyWire.
Investor Analysis
The UK government plans to ban insured tenancy deposit schemes, requiring all landlords and agents to place tenant deposits in custodial schemes held by third-party providers. This removes a widely-used cash flow tool for multi-property landlords and increases compliance risk, particularly during the transition period.
Investor Relevance
Landlords currently using insured deposit schemes — particularly portfolio and HMO landlords managing cash flow across multiple properties — will need to restructure deposit handling processes. Non-compliance risks penalties of up to three times the deposit and restrictions on possession recovery, making this operationally consequential.
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