Tenancy Deposit Scheme

According to the Tenancy Deposit Scheme, it’s mandatory for every landlord or even letting agent to protect the tenant’s deposit through this scheme. The Government started this scheme on April 6, 2007. This is a legal requirement for all landlords wanting to rent out their property.

What is the reason behind the introduction of the Tenancy Deposit Scheme? 

The Government has introduced this scheme primarily to protect and safeguard the tenancy deposits and offer a fair system to settle all the disputes concerning the return of deposits at the end of the tenancy period. Before introducing this scheme, there used to be many complications about whether the dispute was getting resolved relatively or not. With this scheme, the Government has introduced an independent service that helps resolve these disputes effectively. Any tenant can avail of this service completely free of cost.

What will happen if I pay the deposit before April 6, 2007?

If your tenancy period started before April 6, 2007, the landlord is not required by law to protect your deposit under this scheme. At the same time, if any new tenancy agreement has been signed since the original date, your deposit will automatically come under the tenancy deposit scheme. An important point to note here is that the law does not explicitly state that the landlord has been bound to protect this deposit. Still, the Government suggests watching the deposit under various circumstances.

What do the letting agents or landlord have to do?

After a tenant has paid the required deposit, the landlord or the letting agent is responsible for protecting this deposit by following all the terms mentioned in the tenancy deposit scheme. In this scheme there are two types of schemes available:

  • In a custodial scheme, the agent or the landlord pays a certain deposit to this scheme, and this independent service will keep it until the end of the tenancy period.
  • In an insurance scheme, the agent or the landlord can keep all the deposit; however, he pays all the insurance premiums in this scheme. So, it just means that the deposit is completely insured. In case of any dispute, this scheme will repay the amount to the tenant directly. This insurance scheme can also charge a certain fee from landlords for getting a membership. This scheme can also require specific contributions concerning the incurred costs of insurance.

It is entirely up to the agent or landlord to decide what scheme they want to use. All the required information about the scheme must be provided to the tenants within 14 days at the time of deposit payment. This information can include:

  • Contact details of the agent or the landlord
  • The type of tenancy deposit scheme which is being used and other contact details regarding the scheme
  • Any information about the primary purpose or use of a tenancy deposit
  • The procedure that a tenant can use to apply to get his deposit back after the end of the tenancy period
  • The process that the tenant should follow in case any dispute arises due to the deposit

What happens if the agent or the landlord doesn’t agree to provide the required information or if they still need to protect and secure the tenant’s deposit?

In these cases, the tenant can easily apply for an order against the agent or the landlord in the county court, stating that the landlord should pay his deposit back or secure it in any of the schemes under the tenancy.

In addition to the deposit, the court can make an agent or the landlord pay the required compensation to the tenant, which is usually equal to 3 times the original value of the deposit paid by the tenant.

What happens at the end of the tenancy?

At the end of the tenancy period, if the letting agent or landlord agrees on the amount of deposit that should be returned to the tenant, then within ten days, the tenant should get their deposit back without any hassle.

The tenants will also receive specific interest if the deposit was secured in any custodial schemes. The tenant can get their deposit from the custodial scheme via electronic transfer or Cheque. If the deposits are held in an insurance-based scheme, then they will be repaid to you by your landlord either by Cheque or in cash. An important point to note here is that interest in the deposits invested in any insurance-based scheme will not be passed to the tenant.

Central Government-approved Deposit Schemes

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