Tenancy Deposit Schemes

From 6 April 2007, all deposits (up to the level of £25,000) taken by landlords and letting agents for Assured Shorthold Tenancies in England and Wales, must be protected by a tenancy deposit protection scheme.

Deposits are protected to ensure that tenants get all or part of their deposit back, when they are entitled to it. Also, when the deposit is protected, any dispute between tenants and landlords or agents will be easier to resolve. It is also hoped that when a deposit is in a deposit the tenants will be encouraged to look after the property they are renting.

So, when a landlord or letting agent takes a deposit from a tenant, the deposit must be protected in tenancy deposit scheme which is authorised by the government. This new rule applies if the tenancy is an Assured Shorthold Tenancy.
There are three types of schemes schemes.

  1. The Tenancy Deposit Scheme (TDS) is an Insurance-based scheme run by an organisation called The Dispute Service and was established back in 2003 to provide independent dispute resolution and complaints handling for the lettings industry. It has been running a voluntary tenancy deposit scheme for use by regulated agents since that time and is backed by the three professional bodies for letting agents in the residential property sector, ARLA, NAEA and RICS. For more information visit the website www.tds.gb.com  or call 0845 226 7837.
     
  2. Tenancy Deposit Solutions Ltd (TDSL) is an Insurance-based scheme; it is a new company set up as a partnership between the National Landlords Association and Hamilton Fraser insurance brokers. For more information visit the website www.mydeposits.co.uk/
     
  3. The Deposit Protection Service (DPS) is the sole Custodial scheme - the running costs of this scheme are funded entirely from the interest earned on all the deposits held by the scheme. The Custodial scheme is run by Computershare who have administered similar schemes for some years in other parts of the world, particularly Australia and New Zealand. For more information visit the website www.depositprotection.com

So how does it work

At the beginning of a new tenancy agreement, the tenant pays their deposit to their landlord or agent as usual. The landlord or agent must then ensure it is protected.

Within 14 days of taking the deposit, a landlord must provide its tenant with details of how the deposit is being protected. The landlord must provide the contact details of tenancy deposit scheme and the landlord, details of 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. Tenants have a responsibility to return the property in the same condition they took it on.

What happens at the end of the tenancy?

At the end of tenancy the condition and contents of the property should be checked against the agreement made at the start of the tenancy. The landlord or agent then agrees with the tenant how much of the deposit will be returned to them.
Within 10 days the agreed amount of the deposit will be returned to the tenant.

But what if this can’t be agreed?

If no agreement can be reached about how much of the deposit should be returned, there will be a free service to help resolve disputes offered by the scheme which is protecting the deposit.

If you would like to discuss how these new laws will affect your business or would like some advice, please contact us at straightlaw@sethlovis.co.uk or by phone on 020 7420 7030.