Dronfield online August 2011

By Rob Cooke, head of property litigation at Sheffield solicitors, Taylor&Emmet LLP. Rob has experience in all types of disputes and represents a wide ranging client base, from public limited companies to private investment landlords. In this month’s column, he reminds landlords about the deposit protection laws.

I know there are rules protecting a tenant’s deposit, but I don’t really understand why they were introduced. Can you explain?

In April 2007 new laws were introduced stipulating that all assured short hold tenancy deposits must be protected by a government-authorised scheme. This is to make sure that:

• Tenants get all or part of their deposit back when they are entitled
• Any disputes between tenants and landlords or their agents are easy to resolve
• Tenants are encouraged to look after the property they are renting  

Unless you have protected your deposit in one of the available schemes and given your tenant information about how it works, you will lose your automatic right to regain possession of the property at the end of the tenancy.

How does the Tenancy Deposit Scheme work?

At the beginning of a new tenancy, the deposit is paid to the landlord or agent as usual and it is their responsibility to ensure it is protected.

There are three schemes to choose from. The Deposit Protection Service is free to use and will simply retain your deposit from the beginning of your lease until the tenant leaves. The other two schemes are insurance-based (Tenancy Deposit Solutions Ltd and Tenancy Deposit Scheme). They allow the landlord or agent to retain the deposit, after paying a premium to insure against failure to repay the money.

You must provide your tenant with details about how their deposit is being protected within 14 days of taking the money. This must include:

• The contact details of your chosen Tenancy Deposit Scheme
• Your contact details or those of your agent
• How to apply for the deposits release
• Information explaining the purpose of the deposit and what to do if there is a dispute about its return

At the end of the tenancy, the property’s condition and contents should be checked and you should agree with the tenant how much deposit will be returned. This amount must then be paid within ten days. If an agreement cannot be reached, there are free services offered by the protection schemes to help end the dispute. The contentious amount of money will be held by the scheme until the issue is resolved.

What happens if I don’t secure my tenant’s deposit?

If you don’t subscribe to one of the three Tenancy Deposit Schemes, your tenant can apply to the local county court for an order forcing you to repay the deposit or protect it in a scheme. If a deposit remains unprotected for more than 14 days, you could be required to pay the tenant three times the original amount.

For further information, visit the scheme providers’ websites:

• The Deposit Protection Service: www.depositprotection.com
• Tenancy Deposit Solutions Ltd: www.mydeposits.co.uk
• Tenancy Deposit Scheme: www.tds.gb.com