Protecting Your Tenant’s Deposit – The Complete Guide to Deposit Protection Schemes

When renting a property, a landlord must hold the deposit in a government-approved tenancy deposit scheme (TDP) if the property rented is on an assured shorthold tenancy that started after 6 April 2007.

Today we are sharing a complete guide to help both landlords and tenants understand how Deposit Protection Schemes work.

We have covered the most important information you will need to know however, if you do have any questions, please make sure you get in touch with our friendly property team.

What does a tenancy deposit scheme do?

The Tenant Fees Act 2019 states that a deposit of up to five weeks’ rent must be paid when a tenancy agreement is being set up. A landlord must also ensure that the tenant’s deposit is put into what is known as a tenancy deposit scheme (TDP) within 30 days of receiving it. These are backed by the government and mean that a tenant will be guaranteed to get their deposit back if:

  • They have met the terms of the tenancy agreement.
  • There has been no damage to the property.
  • They have paid their rent and bills.

What does a deposit cover?

Deposits are paid at the beginning of a tenancy. These are paid to cover things such as damage to a property, cleaning, and unpaid utility bills. Once the tenancy ends, the landlord will return the deposit, unless the property has not been returned in a good condition. This does not include wear and tear over long periods of time or any damage that should have been fixed by the landlord.

What type of TDP scheme should landlords use?

There are two basic types of deposit protection schemes:

  • Custodial – The landlord will hold the deposit in this scheme for the duration of the tenancy.
  • Insurance – The landlord will pay a fee to have the deposit protected, then the tenant will be repaid at the end of the tenancy. If this does not occur, the insurer will pay the tenant directly. It will then be the responsibility of the insurer to try and get the money back.

Which TDP schemes are available?

For properties in England or Wales, you can use the following schemes:

  • Deposit Protection Service (DPS).
  • MyDeposits.
  • Tenancy Deposit Scheme.

When should a tenant receive the deposit back from the landlord?

Once a tenancy has completed, the deposit must be returned to the tenant within 10 days of both the landlord and tenant agreeing how much will be returned.

What happens if a landlord and tenant disagree on the deposit return?

A tenancy deposit protection scheme exists for this very reason. If a landlord and tenant are unable to agree on how much deposit should be returned, the scheme that is used to protect the money will often offer a service to solve the problem.

For example, DPS offer a free Dispute Resolution service. The landlord and tenants can both submit to an independent, impartial adjudicator who will then decide how the money should be allocated.

Do you have a property to let? Let Boxall Brown & Jones help you get it on the market and ready for viewings. Take a look at our full property management service and get in touch with our friendly lettings team today.

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