From 6 April 2007 a new law governing housing deposits has come into force affecting many thousands of property landlords, letting agents and tenants. Each year residential landlords take deposits worth about £1.2bn from tenants to secure them against damage to the rented property and contents. From April 2007, all deposits (up to the level of £25,000) taken by landlords and letting agents (for Assured Shorthold Tenancies in England and Wales), must be protected by a tenancy deposit protection scheme. The new tenancy deposit law will be introduced to give more protection to tenants by preventing landlords and letting agents from unfairly withholding a tenant’s deposit. The scheme protects all Assured Shorthold Tenancies in England and Wales (covering most tenancies since 1997).
Essentially the change will compel a landlord to hand over deposits to a third party or have an insurance scheme cover it. Landlords will still be able to make deductions for damage but in the case of a dispute the third party or insurance company will act as the arbitrator and pay out money owed to tenants.
Key to the success of the scheme will be the preparation and agreement of a full and detailed inventory of the property and contents at the commencement of the tenancy. It is not realistic to expect every landlord and tenant to agree and there will be plenty of work for independent inventory clerks.
The Tenancy Deposit Protection ensures:
- tenants get all or part of their deposit back (if they are entitled to it)
- any disputes between tenant and landlord or agent will be easier to resolve
- landlords and letting agents who do not protect tenancy deposits will have to pay their tenant back three times the deposit
What is the process?
- Start of a new tenancy: at the beginning of a new tenancy agreement, the tenant pays the deposit to the landlord or agent as usual.
- Within 14 days the landlord or agent is required to give the tenant details about how their 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 depositWhat are Tenancy Deposit Schemes?
The schemes will allow tenants to get all or part of their deposit back (when they are entitled to it) and encourage tenants and landlords to make a clear agreement from the start on the condition of the property.
The Tenancy Deposit Scheme we use
As Letting Agents, we use an insurance backed deposit scheme which is under-written by "Mydeposits.co.uk" which is a Government approved deposit scheme.
My Deposits.co.uk - formally known as Tenancy Deposit Solutions Ltd (TDSL) is a partnership between the National Landlords Association and Hamilton Fraser Insurance.
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