Tenancy Deposit Scheme

Overview

The majority of landlords and letting agents, will ask their tenants (in respect of an assured shorthold tenancy that started after 6 April 2007), for a deposit, as security against damage, or non-payment of their rent. Your landlord must use a tenancy deposit protection scheme in order to safeguard it.

How does the scheme work?

The purpose of a tenancy deposit protection scheme is that it safeguards your deposit. Therefore at the end of your tenancy you can guarantee you will get your deposit back as long as you are entitled to it. You may not be entitled or only entitled to some if you have damaged the property or are in rent arrears.

Disagreements

The scheme includes a service to resolve any disagreements about the deposit without the need to attend court.

Insurance based and Custodial schemes

Your landlord has the choice of two types of tenancy deposit schemes, but must choose one.

Insurance based scheme

With this option your landlord keeps hold of the deposit and pays insurance into the scheme.

Custodial scheme

For the custodial scheme option, your landlord will pay the deposit into the scheme and it is the responsibility of the scheme to look after it.

Information your landlord must provide

Before entering into an assured shorthold tenancy, you should ask your landlord which tenancy scheme they will be using to protect your deposit

Within 30 days of receiving your tenancy deposit your landlord is required by law to provide you with:

  • Full details of the protection scheme they are using
  • The amount of the deposit
  • The address, which the deposit relates to
  • Details of how the will be paid back to you at the end of the tenancy

If your landlord does not fulfil their requirements , you can take court action and the judge may order your landlord to put your deposit into a scheme and also has powers to fine your landlord and order compensation.

Most landlords will provide an inventory which lists fixtures and fittings in the property. However it is essential that an agreement is made with the landlord as to the condition of those items and the property at the start, in order to prevent any disputes when you leave at the end of the tenancy.

At the end of the tenancy

Providing there is no dispute with your landlord about the amount to be paid back, you should receive it within ten days of handing back the keys.

Custodial scheme

If your deposit is being held in the custodial scheme both you and your landlord should inform the scheme by completing a specific form. Once the scheme has been notified of the agreed amount, they will pay you within ten days. In the event of a dispute, they will hold on to the deposit until the dispute has been resolved.

Insurance-based scheme

Once you have both agreed the amount of the deposit to be returned to you, it will be given to you direct from your landlord within ten days.

Disputes

If youโ€™re in a dispute with your landlord, then your deposit will be protected in one of the schemes until the issue is resolved. You should receive back any undisputed amount back and the disputed amount will be held by the scheme.

Court Action & Dispute Resolution

The alternative dispute resolution (ADR) service, is a free service designed to resolve disputes without the parties going to court. If you agree to have your issues resolved with the ADR service, their decision will be final and you will not be able to go to court afterwards if you are unhappy with the decision. They will decide on the amount you will get back and the tenancy deposit scheme will then pay the money to you. Court action may be taken if; neither you or your landlord wants to use the ADR service or where your landlord has not done something which is required by law in relation to the tenancy deposit protection.

Court powers

You cannot receive compensation or make a tenancy deposit scheme if your tenancy ended before 6 April 2012. After this date the court can consider, compensation, fines and where necessary ordering the landlord to put the deposit into a scheme.

There is a special procedure which private landlords often use to evict tenants by giving two months' notice (called a section 21 notice) without having to give reasons. If your landlord tries to evict you and your deposit is not protected, or fulfilled their legal requirements, the procedure is likely to be denied by the court and only likely to be granted if;

  • The deposit is returned in full
  • An agreed amount is returned to you
  • The required information is provided to you
  • You make a tenancy deposit claim and the issues are resolved or withdrawn

It is essential to seek further advice from a specialist housing adviser if you have any issues or disputes and before going to court.