The new Deregulation Act means more tenancy deposits are now under deposit protection law if received before 6 April 2007, and gives landlords until only 23 June to register them in a government approved scheme. Otherwise they face a penalty of between one and three times the value of the deposit and restrictions on regaining possession of their property.

A series of court rulings brought urgent need to clarify the law when consternation arose over which deposits must be protected and in what circumstances prescribed information documents must be given to tenants. If landlords do not give tenants full written information about their protection they still face the fine, even if the deposit is protected.

Deposits must now be protected by 23 June if received before 6 April 2007 and if the tenancy renewed on a periodic basis after that date.

TDS chief executive Steve Harriott said: “Landlords have only a matter of weeks to comply before the amnesty ends and penalties take effect. A small number of deposits are exempt but I would urge any landlord who holds an unprotected deposit to register it online with Tenancy Deposit Scheme immediately to avoid any future problems.”

If a tenancy renewed on a periodic basis before 6 April 2007 deposit protection is not compulsory. However the landlord will still be prevented from regaining possession using the standard section 21 notice unless they protect or return the money.

Harriott also said the Act has highlighted that many landlords have failed to protect deposits even under the existing laws.

He said: “We have seen a surge in landlords contacting us in recent weeks. Many have only just become aware that they should have already protected deposits; a stark reminder that thousands of landlords have been falling foul of deposit protection law, often unknowingly.”