Deposit registration failure leads to landlord compensation

All names have been changed to maintain anonymity.

The complaint

Cath complained that the letting agent failed to register her tenants’ deposit with a government-approved scheme within the required 30 days of receiving it. The deposit was not registered until almost a year later, and Cath said she was never informed of the delay.

After the tenants moved out, they took legal action against Cath for failing to protect their deposit. As a result, Cath incurred £7,296.92 in losses and sought to recover this amount from the letting agent, arguing that their failure to meet their legal obligations had directly caused her financial loss.

The letting agent accepted that they had not registered the deposit within the required timescale. They offered to cover 50% of Cath’s compensatory and legal costs but did not provide further explanation for why they would not reimburse the full amount.

The investigation

The Ombudsman found that the letting agent had failed to comply with its responsibilities under the law and The Property Ombudsman Code of Practice, which requires deposits to be protected within 30 days. The evidence showed that the business realised the deposit was unregistered in December 2022 and registered it at that time, but they did not inform Cath of the situation. This meant she had no opportunity to take action to reduce her losses or protect herself from a potential legal claim.

The Ombudsman concluded that Cath’s financial losses were a direct result of the letting agent’s failings. It was their duty to register the deposit, and their inaction placed Cath at legal and financial risk through no fault of her own.

Outcome

The Ombudsman awarded Cath £7,296.92 in compensation for her financial loss and a further £800 for the aggravation, distress and inconvenience caused. In total, Cath was awarded £8,096.92.