According to Tenancy Deposit Scheme, it’s mandatory for every landlord or even letting agent to protect the deposit of tenant through this scheme. This scheme has been started by government from April 6, 2007. This is a type of legal requirement for all landlords who want to rent out their property.
What is the reason behind the introduction of Tenancy Deposit Scheme?
This scheme has been introduced by the Government primarily to protect and safeguard the tenancy deposits, and offer a fair system in order to settle all the disputes concerning the return of deposits at the end of the tenancy period. Before the introduction of this scheme, there used to be many complications about whether the dispute is getting resolved fairly or not. Now, with this scheme, government introduced an independent service that helps to effectively resolve these disputes. Any tenant can avail this service at completely free of cost.
What will happen if I paid the deposit before April 6th 2007?
If your tenancy period started before April 6th 2007, this means that 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 be automatically come under the tenancy deposit scheme. An important point to note here is that, the law does not specially states that the landlord has been bounded to protect this deposit, but it’s just a suggestion by the Government that they should protect the deposit under various circumstances.
What does the letting agents or landlord have to do?
After a tenant has paid the required deposit, the landlord or the letting agent have the responsibility to protect this deposit by following all the terms mentioned in tenancy deposit scheme. In this scheme, there are basically two types of schemes available:
- In custodial scheme, agent or the landlord pays a certain deposit to this scheme, and this independent service will keep it until the end of tenancy period.
- In insurance scheme, 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 amount of fees from landlords for getting a membership. This scheme can also require certain contributions concerned with the incurring costs of insurance.
It is entirely up to the agent or landlord to decide upon what scheme they want to use. All the required information about the scheme must be provided to the tenants within a period of 14 days at the time of payment of deposit. This information can include:
- Contact details of 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 main purpose or use of a tenancy deposit
- The procedure that a tenant can use to apply in order 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 of they haven’t protected and secured the deposit of tenant?
In these cases, the tenant can easily apply for getting 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 one of the various schemes under tenancy deposit schemes.
In addition to deposit, the court can also make agent or the landlord to 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 actually 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.
In case the deposit was secured in any custodial schemes, the tenants will also receive certain interest on their deposit. Tenant can get their deposit from custodial scheme directly, or either by electronic transfer or by using a Cheque. If the deposits are held in an insurance-based scheme, then it will be repaid to you by your landlord either by Cheque or in cash. An important point to note here is that any interest in the deposits invested in any insurance-based scheme will not be passed to the tenant.
Major Government approved Deposit Schemes
- Tenancy Deposit Solutions Ltd (TDSL) can be found at www.mydeposits.co.uk
- The tenancy Deposit Scheme (TDS) can be found at www.tds.gb.com