Q: What is a tenancy deposit scheme?
A: It is a government scheme that ensures tenants receive their deposit back after their tenancy has ended. It has been put in place to protect a tenants deposit against any circumstance that may arise for the Landlord, from bankruptcy to insolvency. It is now a legal requirement for all Landlords renting their property to comply with this system. Landlords may either use the Insurance based scheme or the Custodial scheme.
Q: What is the insurance scheme?
A: Basically, the tenant will be asked to pay the required deposit to the landlord who will then pay a fee to the chosen insurer and keep the deposit himself.
Within the next two weeks the agent or landlord MUST give you relevant details as to how your money will be protected.
- Contact information for the Tenancy deposit scheme that has been chosen
- The landlord/agent contact details.
- Details on how you can apply for your deposit to be released, after the tenancy has ended.
- All relevant information on the reasons behind the deposit scheme
-What to do regarding your money, should there be a dispute.
At the end of the tenancy:
You are guaranteed to receive a full deposit back when you vacate the property (unless deductions are made for any damage caused, a decision made by your landlord).
Should your landlord choose to unlawfully withhold your deposit the deposit scheme used will repay your monies in full, or the court will order a payment of three times the amount to the Landlord.
Q: What is the custodial scheme?
A: Basically when the tenant pays the required deposit the Landlord must pay the full amount in to the scheme.
Again, within two weeks the landlord/agent MUST give the tenant all relevant information regarding the scheme and contact details of all parties.
At the end of the tenancy:
Assuming there is no dispute; either the Landlord or the tenant may inform the scheme who will then release the money for the tenant.
If however there is any conflict over the deposit they can refer it to the Alternative Dispute Resolution (ADR) who will decide the outcome. If both parties choose to use the ADR they must accept the final decision
Q: I am a landlord, in a nutshell, what does this mean for me?
A: You are legally obliged to use one of the two deposit schemes.
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If you decide to use the insurance based scheme you will be required to pay a fee.
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If you decide to use the custodial scheme you will not be charged.
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If there is any disagreement between yourself and the tenant the deposit will be held by the scheme until the dispute is resolved.
Q: I am thinking about renting a property, will I be covered?
A: You are eligible if:
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You are paying some kind of deposit for your accommodation (this does not include any rent paid in advance.)
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Your tenancy is an ‘Assured Short hold Tenancy’ (This is true of most new tenancies)
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You are renting a property on/after 06/04/2007.