Jersey’s tenancy deposit protection laws are likely to be adopted by neighbouring Guernsey.
Deposit protection was proposed by the States of Guernsey as a way of safeguarding money held by letting agents for landlords and tenants. The call followed the sudden closure of a letting agency holding thousands of pounds of rents and deposits.
The States said the measure would be explained before the end of 2018.
Lawyers are expecting the Guernsey scheme to be modelled on that operating in Jersey.
Landlords or letting agents will have 30 days to place deposits on protection with a States authorised scheme administrator. Failing to do so could put the deposit taker at risk of fines.
The deposits would be banked, so the money would still be available if the landlord or letting agency went out of business, explains Martin Baudains, of law firm Ogiers.
Protected deposits are handed back to tenants, providing the landlord has no claim for damages, rent arrears or the tenant failing to comply with other terms of the tenancy agreement.
“The deposit protection scheme has clear benefits for both landlords and tenants; however, as good as it may be, it is unlikely to solve every problem,” said Boudains.
“For example, the law may not provide protection where a landlord or agent ceases trading before placing the money with the scheme. Any such scheme would need to be run efficiently so that tenants could have their deposits returned promptly at the end of the lease, as they may need them to rent another property.”
Deposit protection schemes have run successfully in England, Scotland, Wales and Jersey.
They also provide a free dispute resolution service for landlords and tenants.