Residential letting agents Jordan’s are urging property investors to check the identity of anyone paying a tenant’s deposit, or they could face a hefty fine.

If a tenant’s deposit is paid directly to an agent or landlord by a third party such as a parent, guarantor or friend then all the usual rules relating to deposits apply. This means the third party is entitled to the full benefits of deposit rules and must receive a copy of the ‘prescribed information’ - this explains how the deposit will be protected. This should be given within 14 days of the registration of the deposit.

If the deposit payer does not receive this, the landlord could be liable to a penalty of three times the amount of the deposit and may be unable to retain possession of their property until the tenant is willing to leave, according to Jordan’s.

William Jordan, managing director of Jordan’s, said: “It’s quite common for a parent to pay a deposit for their child, but too many landlords do not realise that if this happens, the parent must be given details of how their deposit will be handled. If the landlord is with an agent, they must check their letting agent has given this information to avoid ending up with a fine. Agents should automatically check the identity of anyone paying on behalf of a tenant and the name and relationship to the tenant should be recorded.”