Tenancy deposit schemes are something most people are likely to encounter as a tenant or as a landlord renting out property.
Tenancy deposit schemes are government approved schemes in which a landlord must place a tenant’s deposit to protect it for the duration of the tenancy.
Any deposit which has been taken for an assured shorthold tenancy that commenced after the 6th April 2007 must be protected in one of these schemes.
These schemes ensure the tenant will receive their deposit back if they’ve met the terms of their tenancy agreement, haven’t damaged the property and have paid the rent and bills on time.
The services normally also provide a dispute resolution service for landlords and tenants in the event that the landlord feels he has a valid claim to some or all of the deposit and the tenant disagrees.
The scheme will continue to protect the money until the dispute is resolved.
Any deposit that is given to a landlord or the managing agent must be protected within 30 days of them receiving the deposit.
There are a number of things that landlords and tenants should both be aware of regarding tenancy deposit schemes and it is useful for all parties involved to be aware of these.
What will happen if the deposit is not protected?
• One of the most important things to bear in mind if you are a landlord looking to protect a deposit is that there can be severe penalties if this is not complied with and if the deposit is not protected.
• In the instance where a deposit is not protected within the required time frame or has not been protected for the duration of the tenancy, the tenant may claim the return of the deposit and between one and three times the amount of the deposit in compensation.
• Not protecting a deposit will also mean that the landlord is unable to evict the tenant with a Section 21 notice even if there is grounds for this.
Do the schemes vary?
• Landlords should also be aware that each individual scheme will also operate under its own rules and should ensure they are aware of these when protecting the deposit, as well as any changes or updates made to the rules.
• Once the deposit has been protected the tenant should be notified of which scheme it is protected with and should also be provided with the prescribed information related to this.
What if there’s a dispute?
• In order to effectively back up any claim you may have to the deposit amount if a dispute arises at the end of the tenancy, it is important to have a thorough, professional inventory carried out at the property. This should be verified and signed by the tenant and landlord and will provide evidence that may be required in the event of a dispute.
• The individual schemes will offer a free dispute resolution service which may be used should a dispute arise over the deposit amount to be returned.
Written by Sarah Male, Urban Sales and Lettings