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Tenancy Deposit Scheme
As a landlord, you are required by law to arrange for your tenant’s deposit to be protected in accordance with one of the government-backed tenancy deposit schemes. The deposit must be protected within 30 days of receiving it, if the tenancy is an assured shorthold tenancy.
Although the tenancy deposit scheme provisions came into force on 6 April 2007, it will also apply to deposits held by landlords under assured shorthold tenancies that started before this date.
There are three authorised schemes in England and Wales:
- The Deposit Protection Service
- Tenancy Deposit Scheme
All three providers operate both a “custodial scheme” which requires the landlord to pay its tenant's deposit to a scheme administrator within 30 days of receipt from the tenant, and an “insurance scheme” under which the landlord retains possession of the deposit but secures it by paying a fee and insurance premiums to the scheme administrator.
Information you must provide to the tenant
Within 30 days of receiving the deposit, you must inform the tenant of the following:
- the address of the property;
- the amount of the deposit which has been paid;
- how the deposit is protected;
- the name and contact details of the tenancy deposit protection scheme and its dispute resolution service;
- your (or the letting agency’s) name and contact details;
- the name and contact details of any third party that has paid the deposit;
- in what circumstances you would keep some or all of the deposit;
- how to apply to get the deposit back;
- what to do if they can’t get hold of you at the end of the tenancy; and
- what to do if there’s a dispute over the deposit.
At the end of the tenancy
You must return the deposit to the tenant within 10 days unless there is a dispute. You are permitted to retain the deposit/a portion of the deposit if your tenant:
- has not met the terms of their tenancy agreement;
- has caused damage to the property; or
- has failed to pay rent and/or bills.
This should be an amount proportionate to the losses suffered as a result of any of the above.
If you do not protect the deposit
Your tenant is entitled to take legal action. Various consequences can arise from this, including:
- a court order requiring you to repay the deposit/to pay it into a deposit scheme;
- a court order requiring you to pay the tenant a sum of up to 3 times that of the original deposit within 14 days of the order; or
- a court order stating that the tenant does not have to vacate at the end of the tenancy.
You will not be able to rely on any notice under s.21 of the Housing Act 1988 (for possession) if you have not protected the deposit.
The landlord will need to return the deposit before serving a s.21 Notice to be able to recover possession through the courts.
This must be dealt with by you, the landlord, within the relevant timescales. For more information, please visit: https://www.gov.uk/tenancy-deposit-protection/overview.
If you have any queries about the Tenancy Deposit Scheme you can contact Daniel Coleman on 023 8071 7487 or email email@example.com.