Almost two thirds of buy-to-let landlords are failing to protect the deposits paid by their tenants, according to the Deposit Protection Service (DPS).
In a survey by the organisation, 62 per cent of landlords admitted they were not registered with a deposit protection scheme, which is a legal requirement.
There are two types of schemes available for landlords and letting agents - one is insurance-based and the other is custodial.
Since April 2007, landlords taking deposits from new tenants have been legally required to use one of these two protection methods to ensure the deposit is paid back in full.
But the DPS research suggests that only a third are complying with the legislation and the rest are putting their tenants' deposits in jeopardy as well as risking hefty fines.
Kevin Firth, client services director at the DPS, said: "Fifteen months after legislation was introduced, there is no excuse for failing to properly protect your tenants' deposits."
Laws on deposit protection scheme were outlined in the Housing Act 2004.
Published on: July 18, 2008