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Have you made sure your tenancy deposit is protected?

Your rights under the Tenancy Deposit Protection Scheme

The Tenancy Deposit Protection Scheme came into force on the 6th April 2007.

From that date, all deposits (for rent up to £25,000 per annum) taken by landlords and letting agents for Assured Shorthold Tenancies in England and Wales, must be protected by a tenancy deposit protection scheme.

Tenancy Deposit Protection is designed to:

– allow tenants to get all or part of their deposit back when they are entitled to it

– make any disputes easier to resolve

– encourage tenants and landlords to make a clear agreement from the start on the condition of the property

If the landlord is not protecting a tenant’s deposit he will be ordered to repay three times the amount to the tenant.

How does it work?

Kinds of schemes

When the tenant pays their deposit at the beginning of a new tenancy agreement, the landlord or agent must ensure it is protected.

Landlords and agents have a choice of three schemes providers, offering two types of scheme to protect the deposit.

a) Custodial schemes

Money is held by the scheme until it is time for it to be repaid at the end of the tenancy. The custodial scheme is free to use. The landlord simply puts the deposit into the scheme at the beginning of the tenancy. There is one custodial scheme provider.

b) Insurance-based schemes

Under the insurance schemes the landlord keeps the deposit, and pays the insurance scheme to insure against the landlord failing to repay the tenant any money due to him. There is a choice of two insurance-based schemes.

Moving in

At the beginning of a new tenancy agreement, the tenant pays his deposit to the landlord or agent. Within 14 days, the landlord or agent is required to give the tenant details about how the deposit is protected including:

– the contact details of the tenancy deposit scheme

– the contact details of the landlord or agent

– how to apply for the release of the deposit

– information explaining the purpose of the deposit

– what to do if there is a dispute about the deposit

If the tenant does not receive this information, he should ask the landlord or agent the simple question – ‘how is my deposit protected?’

If the landlord isn’t protecting the deposit tenant can apply to the local county court. The court can order the landlord or agent to either repay the deposit to the tenant or protect it in a scheme. If the landlord or agent has not protected tenant’s deposit, they will be ordered to repay three times the amount of the deposit to the tenant.

Moving out

At the end of the tenancy, tenant should check whether he is leaving the property and its contents in the condition in which it was let to him – allowing for fair wear and tear – and check that he has paid the rent and any other expenses.

Disputes

If a dispute occurs and no agreements can be reached on how much of the deposit should be returned, there will be a free service, offered by the scheme protecting the deposit to help resolve any disputes – the Alternative Dispute Resolution (ADR) service.

If landlord and tenant both agree to use the service to resolve disputes offered by their scheme provider, they are agreeing to be bound by its decision.

a) Custodial schemes
If a landlord or tenant does not agree to the release of full or part of the deposit, ADR will be the default way in which to resolve a dispute. If there is a dispute, the scheme will continue to hold the amount until the ADR or courts decide what is fair.

b) Insurance-based schemes
If there is a dispute and the deposit is safeguarded by an insurance-based scheme, the landlord must hand over the disputed amount to the scheme for safekeeping until the dispute is resolved.

The scheme administrator will divide the disputed amount in accordance with the ADR service's, or court's decision.

If the landlord fails to transfer the disputed amount into the scheme, then the scheme will pay the amount due to the tenant as a result of the ADR service's or court's decision. The scheme will then recover the money from the landlord.
 

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