Tenancy Deposit Protection Schemes - Rules

If you are a landlord it is vital that you are aware of the requirement, introduced in April 2007, that all deposits (for rent up to £25,000 per annum) taken by landlords and letting agents for Assured Shorthold Tenancies in England and Wales must be protected by a tenancy deposit protection scheme.

There are two types of tenancy deposit protection scheme available for landlords and letting agents. These are insurance-based schemes and custodial schemes. All schemes provide a free dispute resolution service.

Landlords must be a member of one of the schemes currently in existence. Within 14 days of receiving the deposit, the landlord must provide the tenant with details of how the deposit is being protected including:

• the contact details of the tenancy deposit scheme;
• the landlord’s or agent’s contact details;
• how to apply for the release of the deposit;
• information explaining the purpose of the deposit; and
• what to do if there is a dispute about the deposit.

If a landlord or letting agent does not protect a tenant’s deposit then they will have to pay them three times the deposit sum in compensation.

The new rules were introduced to counteract the actions of rogue landlords who unfairly withheld deposits at the end of a tenancy. Figures produced by mydeposits.co.uk show that since their introduction, 94 per cent of tenants in London who have appealed against a landlord’s decision to keep their deposit after the tenancy has ended have won back a share of their deposit.

The requirement to belong to a tenancy deposit scheme operates to the benefit of both landlords and tenants. From the landlord’s perspective, where damage is done to their property, the scheme allows the appropriate amount to be deducted from the tenant’s deposit as compensation. It is important, however, to make sure that an inventory is carried out at the beginning of the tenancy and once the tenancy is concluded, otherwise there is no proof of the damage claimed and the adjudicator is likely to find in favour of the tenant.

From the tenant’s perspective, the scheme protects them against the actions of unscrupulous landlords by making sure that part or all of their deposit is returned to them, depending on the circumstances.

For further details on the types of scheme and those available, click here.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.