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On 6th April 2007 the Tenancy Deposit
Scheme came into force. It was
introduced to protect deposits which were
unfairly being withheld by landlords and
agents. If a deposit is not protected the
landlord would be ordered to repay three times the
amount to the tenant.
A landlord or agent may ask for a deposit
from a tenant to be held for the duration of
the tenancy to cover such incidents as
damages and breakages.
The amount of deposit can vary but is
normally equivalent to 1 or 2 months rent.
The contract should clearly state how much
the deposit is, who is to hold the deposit,
whether interest is to be paid on the
deposit and the procedure for returning all
or part of the deposit at the end of the
tenancy.
There are two types of schemes available
which provide a free dispute resolution
service and which allow tenants to get all
or part of their deposit back when they are
entitled to it. The schemes also make any
disputes easier to resolve and encourage
tenants and landlords to make a clear
agreement from the start on the condition of
the property.
The two schemes are:
▪ Insurance based schemes
▪ Custodial schemes
Insurance based schemes
The tenant pays a deposit to the landlord or
agent who retains this deposit and pays a
premium to the insurer.
Within 14 days of receiving a deposit the
landlord or agent must give the tenant
details about how their deposit is protected
including:
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The contact
details of the tenancy deposit scheme
selected |
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The landlord
or agents contact details |
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How to apply
for the release of the deposit |
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Information
explaining the purpose of the deposit |
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What to do if
there is a dispute about the deposit |
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At the end of the tenancy:
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If an
agreement is reached about how the deposit
should be divided, the landlord or agent
returns all or part of the deposit |
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If there is a
dispute, the landlord must hand over the
disputed amount to the scheme for
safekeeping until the dispute is resolved |
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If for any
reason the landlord fails to comply, the
insurance arrangements will ensure the
return of the deposit to the tenant if they
are entitled to it and then recover the
money from the landlord |
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If there is a dispute it is mandatory for
the case to be referred to the schemes
Alternative Dispute Resolution (ADR).
Custodial schemes
The tenant pays the deposit to the landlord
or agent who then pays the deposit into the
scheme.
Within 14 days of receiving a deposit the
landlord or agent must give the tenant
details about how their deposit is protected
including:
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The contact
details of the tenancy deposit scheme
selected |
| ▪ |
The landlord
or agents contact details |
| ▪ |
How to apply
for the release of the deposit |
| ▪ |
Information
explaining the purpose of the deposit |
| ▪ |
What to do if
there is a dispute about the deposit |
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At the end of the tenancy:
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If an
agreement is reached about how the deposit
should be divided, the scheme will return
the deposit, divided in the way agreed by
both parties |
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If there is a
dispute, the scheme will hold the deposit
until the dispute resolution service or
courts decide what is fair |
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If there is a dispute, Alternative Dispute
Resolution (ADR) will be the default way in
which to resolve this dispute.
If a landlord and tenant both agree to use
the service to resolve a dispute, they are
agreeing to be bound by its decision.
The interest accrued by deposits in the
scheme will be used to pay for the running
of the scheme and any surplus will be used
to offer interest to the tenant, or landlord
if the tenant isnt entitled to it.
Companies who run
Tenancy Deposit Protection Schemes
The government have awarded contracts to the
following three companies to run these
schemes.
 The
Deposit Protection Service (The DPS)
The
DPS is the only custodial deposit
protection scheme. The service is available
free to all landlords and letting agents.
For more information please contact 0844
4727 000.
Tenancy
Deposit Solutions Ltd (TDSL)
The
TDSL is an insurance-based tenancy
deposit protection scheme operated by the
National Landlords Association and Hamilton
Fraser Insurance. It is available to
landlords and letting agents.
For more information please contact 0844
9800 290
The
Tenancy Deposit Scheme (TDS)
The TDS is run by
The Dispute Service and is
an insurance-backed deposit protection and
dispute resolution scheme. It builds on a
scheme which was established in 2003 to
provide dispute resolution and complaints
handling for the lettings industry.
For more information please contact 0845 226
7837
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UK
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property in the UK please click on the
following links:
Landlord and Tenant Law in the UK
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