Wednesday, 19 September 2018
It is a legal requirement that landlords put their tenants’ deposits in a Tenancy Deposit Protection (TDP) scheme when renting out a property on an assured shorthold tenancy.
Landlords must protect tenants’ deposits 30 days after they are paid, using any of the following schemes:
Even if a deposit is paid by a third party (e.g., tenants’ parents) the deposit must still be protected in the same way.
All TDP schemes offer landlords 2 options:
- the scheme hold the deposit for free – known as a ‘custodial’ scheme
- you or the agent holds the deposit and you pay the scheme to insure it – known as an ‘insured’ scheme
Once the deposit is protected, you must let your tenants know the following information:
- the address of the rented property
- how much deposit they’ve paid
- how the deposit is protected
- the name and contact details of the TDP scheme and its dispute resolution service
- your (or your letting agency’s) name and contact details
- the name and contact details of any third party who paid the deposit
- why you would keep some or all of the deposit – for example, because your tenants damaged the property and you need to fix it
- how to apply to get the deposit back at the end of the tenancy
- 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 amount of deposit to be returned at the end of the tenancy
At the end of a tenancy, deposits must be returned to your tenants within ten days of agreeing how much should be paid back.
If there is a dispute, the deposit will be protected until the dispute is resolved.
If you’re in an ‘insured’ scheme, you or the agent must give the deposit to the TDP scheme. They will keep it until the issue is settled.
If you don’t protect your deposits
It is against the law not to protect your tenants’ deposits.
At any point during the tenancy, tenants can apply to a county court if you haven’t used tenancy deposit protection (TDP).
If the court finds you haven’t protected the deposit, it can order you to:
- repay it to your tenants
- pay it into a custodial TDP scheme’s bank account within 14 days
- repay your tenants up to 3 times their original deposit within 14 days of making the order (as well as repaying the original deposit)
The court may also decide that your tenants don’t have to leave the property when the tenancy ends if you didn’t use a TDP scheme when you should have.
How we can help
If all this sounds somewhat daunting, give us a call on 01604 823456, to find out how we can help. As part of our Managed service, we handle everything to do with tenant deposits both at the start and the end of a tenancy, meaning our managed landlords can rest assured they are complying with all legal requirements.
If you are interested in the benefits our Managed service can offer, do get in touch on 01604 823456– we’d love to chat through your options with you.