Landlords and letting agents that rent a private property on an assured shorthold tenancy have to protect their tenants’ deposits in a government-backed tenancy deposit scheme. It’s the law, and it protects you too.
What is a tenancy deposit protection scheme (TDP)?
A tenancy deposit protection scheme has two main roles: to protect deposits in an authorised scheme, and to help resolve disputes about deposits.
What are the schemes I can use? How much do they cost?
In England and Wales a deposit can be registered with one of these schemes:
They’re quick and free to join if you opt for what’s called custodial protection, where the deposit is held for the duration of the tenancy only. The other option is insured protection, where the landlord holds the deposit and pays the TDP scheme to protect it.
And while there are other schemes you could use, only the three above are protected in law. Other schemes won’t give the same level of protection for either landlords or tenants.
Does a landlord have to put deposit in a scheme?
Yes; as of 1 June 2019 it’s a legal requirement. You have to use a TDP even if a deposit is paid by someone other than the tenant, such as their parents. And you have to pay it in within 30 days of receiving it. Within that time, you must also tell your tenant:
- the address of the rental property
- how much deposit they’ve paid
- how their deposit is protected
- the name and contact details of the TDP 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’s paid the deposit
- why 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
- what to do if there’s a dispute over the deposit.
You don’t need an inventory to join a TDP but it can be helpful to have one anyway. It could help resolve any dispute that may arise at the end of a tenancy.
How can a tenant check if their deposit has been secured?
By visiting the website of the scheme their deposit is protected with and entering a few details, such as a code (provided by the landlord or letting agent), postcode, surname and/or the date the tenancy started. The details asked for differ from scheme to scheme but are all straightforward.
What are the benefits for landlords?
It allows them to have money as security should a tenant break the terms of the tenancy agreement.
What are the benefits for tenants?
They’ll get their deposit money back if, at the end of the tenancy, they:
- meet the terms of their tenancy agreement
- haven’t damaged the property
- paid the rent and all bills in full.
Landlords must return a deposit within 10 days of agreeing with the tenant(s) how much they’ll get back.
How much deposit can a landlord ask for?
Landlords in England cannot legally ask for more than the equivalent of five weeks’ rent for new and renewed tenancies — or six weeks if the annual rent is at least £50,000.
What happens if you don’t protect a deposit?
A tenant can apply to the local county court if a landlord hasn’t used a TDP scheme when they should have.
- repaying the deposit in full to the tenant
- paying it into a TDP scheme’s bank account within 14 days
- a fine between one and three times the deposit amount, payable to the tenant
- you may also lose the ability to get a court order to regain possession of the property (under a Section 21 notice of the Housing Act 1988). The landlord can only serve a Section 21 eviction notice after the deposit has been repaid, or after any court case about the deposit is over.
The court can decide that the tenant won’t have to leave the property when the tenancy ends.
What can a landlord deduct from a deposit?
The landlord or agent can take a payment from the deposit if:
- both landlord and tenant have agreed
- the court has ordered the deposit to be paid.
How are deposit disputes handled?
If there’s a disagreement about how much money should be given back, your tenancy deposit protection scheme offers a free dispute resolution service.
Your not obliged to use the service, but if you do, both tenant and landlord have to agree to it. You’ll both be asked to provide evidence, and the decision made about a deposit will be final. There’ll be no right to appeal. The entire process can be handled completely online. The alternative? Go through the courts.On a final note, the law requires your TDP scheme to guarantee only that the tenant receives the amount they’re entitled to. No more, no less.
Howsy uses MyDeposits.co.uk, a scheme authorised by the British Government that protects tenants’ money across England and Wales.