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Tenancy Deposits & Schemes
Landlords and letting agents
The Tenancy Deposit Scheme comes into force on the 6th April 2007. If you have not protected a tenant’s deposit you will be ordered to repay three times the amount to the tenant - so find out how you can protect deposits and resolve disputes.
Why protect deposits?
Deposits are protected to ensure:
tenants get all or part of their deposit back, when they are entitled to it
any disputes between tenants and landlords or agents will be easier to resolve
tenants are encouraged to look after the property they are renting
Letting a property from 6th April 2007
From 6 April 2007, when a landlord or letting agent takes a deposit from a tenant, the deposit must be protected in a government-authorised tenancy deposit scheme.
This new rule applies if the tenancy is an assured shorthold tenancy.
More on private rent and assured shorthold tenancies (home and community section)
A tenancy agreement is a legal agreement in writing that sets out the rights and responsibilities of both landlord and tenant. It will contain details such as the length of the agreement, the rent payable, and what is and isn't allowed in the property, such as pets.
Types of tenancy agreement:
There are different types of tenancy agreement. Some provide the tenant with more rights than others, and most people have one of three types:
Assured Shorthold Tenancy (AST)
The AST is one of the most common in the private rented sector. If your tenancy began, or was agreed, on or after 28 February 1997, it is likely to be an Assured Shorthold Tenancy. Tenancies starting, or agreed, before that date but after 15 January 1989, are more likely to be Assured Tenancies.
However, it is important to know that if you are not an Assured or an Assured Shorthold Tenant as your rights may be different.
If you live with your landlord as a lodger and share living accommodation, this maybe known as a Non-Excluded Tenancy or Licence
If you landlord has divided a property into flats and the tenant occupies a different flat from the landlord, this maybe known as an Excluded Tenancy or Licence
If you rent a property where the combined rent is over £25,000 per year, this is known a as a Bare Contractual Tenancy
Bare Contractual Tenancies tend to occur in large households where many people will occupy a property, for example a student household. It only takes 5 people paying £100 a week each in rent for the annual rent to be above £25,000 a year.
You should check to see how your circumstances will define your tenancy agreement.
Assured tenancy:
This type of tenancy agreement is usually issued by a housing trust or housing association. They offer some security in that as long as you do not break the terms of the tenancy agreement you may continue to live in the property.
Regulated (or 'protected' tenancy)
If you moved into the property before 15th January 1989, you may have a Regulated or Protected Tenancy. This type of tenancy offers the most protection against rent increases or eviction.
The type of tenancy you have depends on when it was taken out. More details can be found in booklets published by the Department for Communities and Local Government:
Assured and Assured Shorthold Tenancies: A Guide For Tenants
Regulated Tenancies
Letting Rooms in Your Home: A Guide for Resident Landlords
Private landlords:
Private landlords will normally rent their property at the market rate and their right to increase the rent depends on the type of tenancy.
Tenants who have a fixed term of three years or more, are legally entitled to a written tenancy agreement. However, where there is no written tenancy agreement, a tenant with a shorthold tenancy, starting on or after 28 February 1997, has a right to ask for a written statement of any of the following main terms of the tenancy.
The date the tenancy began.
The amount of rent payable and the dates on which it is due.
Any rent review arrangements.
The length of any fixed term.
Deposits:
When you move into your home it is likely you will have to provide the landlord or letting agency with a deposit. This should be requested to cover any unpaid rent or damage to the property. Sometimes, when a tenant decides to move on, there maybe disputes concerning the returnable amount.
When you sign your tenancy agreement always check the details to see what your deposit will cover and how it will be returned. You should also ask for an inventory of the property's contents when you move in. Ensure that you agree with the terms and conditions of the tenancy before you hand any money over.
Tenancy deposit protection
To help end the problem of a tenant's deposit being unfairly withheld by landlords and agents, Tenancy Deposit Protection Schemes have been introduced. All deposits taken for an assured shorthold tenancy must be protected by a government authorised scheme.
More information about Tenancy Deposit Schemes can be found using the link below.
Tenancy Deposit Protection Schemes
Help with your rent:
If you have a low income you may be able to get Housing Benefit to help pay your rent. Your savings as well as your income will be used to work out whether you can get benefit and if so how much.
You can find out more from your local council or the Department for Work and Pensions where you can also download a Housing Benefit claim form.
Moving in:
At the beginning of a new tenancy agreement, the tenant pays their deposit to their landlord or agent as usual. The landlord or agent must then ensure it is protected.
Landlords and agents have a choice of three schemes providers, offering two types of scheme to protect the deposit.
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.
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.
Find out more about the schemes
Find out more about the scheme providers
Protecting the deposit:
Within 14 days of taking the deposit, you must provide your tenant with details of how the deposit is being protected including:
The contact details of tenancy deposit scheme.
The contact details of the landlord.
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.
Tenants have a responsibility to return the property in the same condition they took it on.
Moving out:
At the end of tenancy the condition and contents of the property should be checked against the agreement made at the start of the tenancy. The landlord or agent then agrees with the tenant how much of the deposit will be returned to them.
Within 10 days the agreed amount of the deposit will be returned to the tenant.
Resolving disputes:
If no agreement can be reached about how much of the deposit should be returned, there will be a free service to help resolve disputes offered by the scheme which is protecting the deposit.
Resolving disputes: Tenancy deposit scheme
TENANTS:
From the 6th April 2007, the new tenancy deposit law will be introduced to give more protection to tenants by preventing landlords and letting agents from unfairly withholding a tenants deposit. The scheme protects all Assured Shorthold Tenancies in England and Wales (covering most tenancies since 1997).
What is it..?
Tenancy Deposit Protection is designed to ensure:
You get all or part of your deposit back, when you are entitled to it.
Any disputes between you and your 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 are Tenancy Deposit Schemes..?
Who will run the schemes..?
How does it work..?
Start of a new tenancy:
At the beginning of a new tenancy agreement, pay your deposit to your landlord or agent as usual.
Within 14 days
Within 14 days, the landlord or agent is required to give you details about how your 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 you don’t get this information, ask your landlord or agent the simple question – ‘how is my deposit protected?’
You have a responsibility to return the property in the same condition that it was let to you, allowing for fair wear and tear.
More information on the type of schemes available
Tenancy Deposit Protection - Frequently asked questions
What if your landlord isn’t protecting your deposit..?
You can apply to your local county court. The court can order the landlord or agent to either repay the deposit to you or protect it in a scheme. If your landlord or agent has not protected your deposit, they will be ordered to repay three times the amount of the deposit to you.
More on resolving disputes
Moving Out:
At the end of the tenancy, check whether you are leaving the property and its contents in the condition in which it was let to you - allowing for fair wear and tear- and check that you have paid your rent and any other expenses. Then agree with your landlord or agent how much of the deposit should be returned to you.
Within 10 days – you should have received the agreed amount of the deposit.
The above information is reproduced with permission & is © Crown copyright 2007.
