Tenancy Deposit Protection
Introduction
This guidance is aimed at private individuals renting one or more properties on assured shorthold tenancies.
It is new legislation which governs what a Landlord must do with a deposit. It is designed to prevent disputes between Landlord and Tenant at the end of the tenancy
Which tenancies does this apply to?
All Assured Shorthold Tenancies beginning after 6 th April 2007 where the annual rent is less than £25,000
What if no deposit is taken?
In this case, the new rules do not apply. However, if you take any sums of money by way of security against the Tenant's breach of his liabilities or obligations under the tenancy agreement this requires protection, even it is not called a "deposit". The rules also apply to deposits taken from third persons (i.e. paid by someone else on a Tenant's behalf).
Am I required to provide an inventory under these new rules?
No. However, providing comprehensive inventories and schedules of condition at the beginning of a tenancy can reduce the potential for dispute and provide valuable evidence to use in resolving any dispute that does arise.
What must I do with the deposit?
It must be safeguarded by placing it with a scheme within 14 days of receipt. The Government has awarded contracts to three companies to run these schemes. Two of these run insurance-based schemes, and one runs a custodial scheme.
- Custodial: You pay the whole deposit over to the company running the scheme.
- Insurance-based: You retain the deposit yourself, but you pay an insurance premium to the scheme.
You must give the Tenant certain prescribed information about the scheme within 14 days of taking the deposit.
Who are the scheme providers?
1. The Deposit Protection Service
Tel: 0870 7071 707
Email: enquiries@depositprotection.com
This is the custodial scheme and is free to use. It is run by Computershare Investor Services PLC. Landlords must pay over the whole deposit within 14 days of receipt. The DPS will then hold this in an account for the duration of the tenancy. A proportion of the interest generated is used to pay for the scheme.
2. The Tenancy Deposit Scheme
Tel: 0845 226 7837
Fax: 01442 253193
Email: deposits@tds.gb.com
This is an insurance-based scheme, run by The Dispute Service. Landlords pay a fee per property per year.
3. Tenancy Deposit Solutions
Tel: 0871 703 0552
Fax: 08456 34 34 03
This is another insurance-based scheme, run jointly by the National Landlords Association and Hamilton Fraser Insurance. Landlords pay a one off set up fee, and then an Annual Membership Renewal Fee and a per tenancy Deposit Protection Fee
What will happen if I do not safeguard the deposit?
Your Tenant can apply to the Court to have the deposit safeguarded. The court will order that you place the deposit with the custodial scheme, or repay the deposit money to the Tenant. The Court will also fine you a sum equal to three times the value of the deposit. This must be paid to the Tenant.
You will not be able to serve notice to the Tenant under s.21 Housing Act 1988 until you have safeguarded the deposit with one of the schemes.
What information must I give to the Tenant?
See page 3 for a complete list. The information that you must give is contained in the Housing (Tenancy Deposits) (Prescribed Information) Order 2007 . You must provide this to the Tenant in writing and should ensure that all the prescribed information is included.
If you do not provide the information to the Tenant within 14 days of receiving the deposit, even if you have safeguarded the deposit with a scheme, the Tenant can apply to the Court as above, and you will be fined.
In addition, you cannot serve a s.21 notice to regain possession until you have provided the prescribed information.
What happens at the end of the tenancy?
Custodial Schemes
If you are going to pay back the deposit in full, or you have agreed with the Tenant how much is to be retained then both Landlord and Tenant tell the scheme what they have agreed, and the scheme pays the money back accordingly.
If there is a dispute the scheme will safeguard the deposit until the matter has been resolved by either the Alternative Dispute Resolution (ADR) service that is part of the scheme, or by the Courts.
Insurance-backed Schemes
If you are going to pay back the deposit in full, or you have agreed with the Tenant how much is to be retained then you return that sum to the Tenant.
If there is a dispute you must pay the disputed amount to the scheme and it will safeguard it until the matter is resolved by either the ADR service that is part of the scheme, or by the Courts.
Must I use the schemes' Alternative Dispute Resolution services?
No. They are not compulsory and you may apply to the Court instead. However, the ADR services are free to both Landlord and Tenant.
Where can I go for more information?
There is a good summary of the new rules, with a fairly comprehensive section of Frequently Answered Questions, in the Housing section of the Communities and Local Government Website at www.communities.gov.uk
Prescribed information relating to tenancy deposits. To be provided to the Tenant within 14 days of receiving the deposit.
- the name, address, telephone number, e-mail address and any fax number of the scheme administrator of the authorised tenancy deposit scheme applying to the deposit;
- any information contained in a leaflet supplied by the scheme administrator to the Landlord which explains the operation of the law relating to tenancy deposit protection and the scheme;
- the procedures that apply under the scheme by which an amount in respect of a deposit may be paid or repaid to the Tenant at the end of the tenancy;
- the procedures that apply under the scheme where either the Landlord or the Tenant is not contactable at the end of the tenancy (including a Landlord or Tenant whose whereabouts are known, but who is failing to respond to communications in respect of the deposit);
- the procedures that apply under the scheme where the Landlord and the Tenant dispute the amount to be paid or repaid to the Tenant in respect of the deposit;
- the facilities available under the scheme for enabling a dispute relating to the deposit to be resolved without recourse to litigation (i.e. by use of Alternative Dispute Resolution services); and
- the following information in connection with the tenancy in respect of which the deposit has been paid—
- the amount of the deposit paid;
- the address of the property to which the tenancy relates;
- the name, address, telephone number, and any e-mail address or fax number of the Landlord;
- the name, address, telephone number, and any e-mail address or fax number of the Tenant, including such details that should be used by the Landlord or scheme administrator for the purpose of contacting the Tenant at the end of the tenancy;
- the name, address, telephone number and any e-mail address or fax number of any relevant person. A "relevant person" means any person who, in accordance with arrangements made with the Tenant, paid the deposit on behalf of the Tenant;
- the circumstances when all or part of the deposit may be retained by the Landlord, by reference to the terms of the tenancy; and
- confirmation (in the form of a certificate signed by the Landlord) that the information he provides under this sub-paragraph is accurate to the best of his knowledge and belief; and that he has given the Tenant the opportunity to sign any document containing the information provided by the Landlord under this article by way of confirmation that the information is accurate to the best of his knowledge and belief.
Ashfords is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.
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