All deposits taken by landlords for Assured Shorthold Tenancies now have to be safeguarded by one of three Government approved schemes. The new rules apply to tenancies started or renewed from 6th April 2007 onwards. Tenants should ask their landlord about the details of the scheme when signing a new tenancy agreement.
Landlords can choose which of the three schemes they wish to use and must safeguard each deposit and inform the tenant which scheme has been used within 14 days of receiving the deposit.
The schemes have been introduced with the intention of providing a fairer system for how the deposit is handled, and how it is returned at the end of a tenancy. Historically, at the end of a tenancy, if a landlord decided to keep all or part of the deposit, it was difficult for a tenant to get it back.
The new schemes are intended to independently (i.e. they take neither the side of tenants or landlords) administer deposits and where necessary resolve disputes about deposits at the end of a tenancy. The service is free for tenants.
Even if the deposit is provided by someone else (a family member, or a Rent Deposit Scheme), it would still need to be paid, by the landlord, into one of the three schemes.
There are two different types of tenancy deposit protection scheme:
- A custodial scheme - the landlord or letting agent will pay the tenant’s deposit into the scheme, which will keep it until the end of the tenancy. At the end of the tenancy, unless there is a dispute, the deposit is returned directly to the tenant.
- An insurance scheme - the landlord or letting agent actually retains the deposit in this type of scheme, but pays insurance premiums to the scheme. So if there is a dispute, and it finds in favour of the tenant, it will repay the tenant the agreed amount directly. The insurance scheme is able to charge fees to landlords for membership.
The landlord must provide information to the tenants within 14 days of the deposit being paid, including:
- Contact details for the landlord or letting agent
- The contact details of the tenancy deposit scheme they are using
- Information on how to apply to get the deposit back at the end of the tenancy
- What tenants can do if there is a dispute about the deposit.
More information
The three different tenancy deposit protection schemes are:
Tenancy Deposit Solutions Limited (TDSL) -
www.mydeposits.co.uk (insurance scheme)
The Deposit Protection Service (DPS) -
www.depositprotection.com (custodial scheme)
The Tenancy Deposit Scheme (TDS) –
http://www.thedisputeservice.co.uk/ (insurance scheme)
www.direct.gov.uk/en/TenancyDeposit/index.htm