subject: Tenancy Deposit Protection Schemes [print this page] What are Tenancy Deposit Protection Schemes?
Tenancy Deposit Protection Schemes were introduced through the Housing Act 2004, to enable tenants to get all or part of their deposit back from their landlord or letting agent providing they are entitled to it.
All landlords and letting agents renting property under an Assured Shorthold Tenancy in England and Wales are required by law to hold deposits under a Tenancy Deposit Protection Scheme.
The Tenancy Deposit Protection Scheme ensures that all landlords and letting agents treat their tenants fairly, and when entitled to the tenant receives their deposit back at the end of the tenancy. The scheme comes into force on the 6th April 2007.
What is a Deposit?
A landlord will usually seek a deposit before offering a tenancy to protect them against losses due to damage, rent arrears or other debt incurred when a tenant leaves.
What Deductions can be Made from a Deposit?
Deductions can be made from a deposit when a tenant leaves a property for:
rent arrears
damage that is more than fair wear and tear
the property not being cleaned
outstanding bills
failure to return keys
leaving before the end of a fixed term of a contract
failing to give proper notice or agreeing surrender.
Aims of Tenancy Deposit Protection Schemes
Before introduction of these schemes, if a landlord kept all or part of your deposit it could be difficult to get it back. With the new schemes, an independent service helps to resolve disputes about deposits at the end of a tenancy.
There are two main aims:
To ensure good practice in deposit handling, so that when a tenant pays a deposit, and is entitled to get it back, they can be assured that this will happen.
To help with the settling of disputes by having an alternative dispute resolution service (ADR). It will also encourage tenants and landlords to have in place, from the outset, clear agreement on the condition of the property through best practice, such as the use of inventories, and agreement on the condition of the property
What Type of Tenancy requires the use of a Tenancy Deposit Protection Scheme?
With all Assured Shorthold Tenancy agreements the landlord or letting agent is required to pay the deposit from the tenant into a Tenancy Deposit Protection Scheme.
Assured Tenancies and company lettings are not covered by the Tenancy Deposit Protection Scheme.
When is a Tenant Protected by the Tenancy Deposit Protection Scheme?
If a tenancy began on or after 6 April 2007 and was let on an Assured Shorthold Tenancy the tenant is entitled to have their deposit protected through the Tenancy Deposit Protection Scheme.
What if I Paid a Deposit Before 6 April 2007?
If your tenancy started before 6 April 2007, then you will not normally be protected by the scheme. However, if you have been given a new tenancy agreement since that date, you should get advice. In this situation, the law does not specifically say that your landlord has to protect your deposit, but the Government has suggested that they should do so. An adviser may be able to help you come to an agreement with your landlord.
What does my Landlord or Agent have to do?
After you've paid your deposit, the landlord or agent must then protect your deposit using a tenancy deposit scheme. There are two types of scheme available:
A custodial scheme, where the landlord or agent pays the deposit to the scheme, which will keep it until the end of your tenancy.
An insurance scheme, where the landlord or agent keeps the deposit but pays insurance premiums to the scheme. This means that the deposit is insured if there is any dispute, and the scheme will repay the tenant the agreed amount directly. The insurance scheme can charge fees to landlords for membership and can require contributions towards the costs of insurance.
It will be up to your landlord or agent to decide what scheme to use. They must then provide certain information to you within 14 days of the day when you paid your deposit. This information includes:
information about the purpose of a tenancy deposit
how you can apply to get the deposit back at the end of the tenancy
what you can do if there is a dispute about the deposit.
Is there anything I need to do?
When you move into a property, it's also a good idea to draw up an inventory. An inventory is a detailed list of the contents and condition of the property and any items provided with it, such as furniture or equipment. Having an inventory can help you resolve disputes at the end of your tenancy about whether you've caused any damage to the property or whether items are missing. It is in your own interests to take care of the property you are renting.
It is also advisable to keep a record of all the rent payments you make either in a rent book or by keeping receipts.
What Information should the Tenant and Landlord have on the Tenancy Deposit Protection Scheme?
The Housing Act 2004 places a requirement on the landlord to provide the tenant with information about how their deposit is being protected, within fourteen days of receipt of the deposit.
The scheme that the landlord registers the deposit with will provide them with information, which should then be passed on to the tenant.
The scheme must provide the landlord with:
The name, address and contact details of the scheme provider
The name, address and contact details of the Alternative Dispute Resolution Service
Details of the procedures for applying for the return of the deposit
Procedures if the landlord and tenant are not contactable at the end of the tenancy
A standard information leaflet explaining how the deposit is protected by the Housing Act 2004
What Happens at the End of my Tenancy?
When you leave, if you and your landlord or agent both agree on how much of the deposit you should get back, you should get it back within ten days of agreeing.
When does a Tenant receive his Deposit Back?
At the end of the tenancy if there are no disputes over the amount of deposit to be refunded the tenant will receive the deposit back. If both the landlord and tenant agree that the deposit is to be returned it must be returned to the tenant within ten days.
What Happens if a Deposit Dispute Occurs?
Both the Insurance Based and Custodial Schemes provide details of an Alternative Dispute Resolution Service (ADR).
Any disputes over the deposit can be refereed to the ADR service provided both the landlord and tenant agree to use this service to settle the dispute. Once the ADR makes a decision about the deposit this is binding and neither the tenant nor landlord can take the dispute to the courts. If the tenant or landlord does not wish to use the ADR service then the dispute is resolved through the courts.
Who Holds the Deposit when a Dispute is in the Process of Being Settled?
Insurance Based Schemes
If the deposit was registered with an Insurance Based Scheme, the landlord will not be able to hold all of the deposit whilst the dispute is being resolved. The undisputed amount can be returned to the tenant and the landlord can keep the remaining undisputed amount. However, the disputed amount is required to be put into the Insurance Based Scheme. Only when the ADR service or the court has reached a decision on how the deposit should be dealt with will the scheme refund the deposit based on the decision made. The deposit should be returned within ten days of the decision being made by the ADR service or the courts.
Custodial Schemes
The disputed deposit amount will remain in the Custodial Protection Scheme, whilst the remaining undisputed amount can be retuned to both tenant and landlord. If both the tenant and landlord agree to use the ADR service provided by the Custodial Scheme, then the dispute can be resolved in this way. If there is a disagreement about using the service then the dispute can be taken to the courts. When the ODR service or courts have made a decision on the deposit dispute the amounts can be refunded accordingly by the Custodial Protection Scheme.
What if a Landlord fails to Provide the Tenant with Information on the Tenancy Deposit Protection Scheme?
When accepting a deposit the landlord or letting agent is required to ensure:
The deposit is protected by one of the three government backed Tenancy Deposit Protection schemes.
They follow the rules of the Tenancy Deposit Protection Scheme which they have registered with.
The tenant is provided with information within fourteen days of the deposit being received.
Failure to comply with any of above may lead to the landlord facing court action and being unable to reposes the property, under Section 21 of the Housing Act.
The tenant has the right to seek compensation if the landlord does not provide them with information about the Tenancy Deposit Protection Scheme used. The compensation for the tenant is equivalent to three times that of the deposit.
In June 2008, a case came before the Court in Cardiff where the letting agent failed to protect the deposit. The landlord had to pay the tenants compensation equal to three times the deposit of 900 (total: 2,700 + costs) and also refund the original deposit in full. In Gloucester in March, a landlord was required to take the same action even though there were rent arrears.
Therefore, in order to avoid any sort of compensation, Use Net Lawman's documents to
comply with the regulations. Our documents are in plain English with explanatory notes and drafted by expert team Solicitor and Barrister. Our templates include every rule of Tenancy Deposit Scheme, and you will be protected by law.
