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Tenancy deposit protection

Tenancy deposit protection is a legal requirement for all assured shorthold tenancies (ASTs) and for periodic tenancies too. Essentially, this requires a landlord – or an agent on the landlord’s behalf – to protect the security deposit that is handed over by a tenant at the start of a tenancy with one of the government approved schemes.

This may either involve the deposit being paid to one of the schemes (called a ‘custodial scheme’) or it may be that the landlord or agent retains the deposit in their own bank account but is a member of an insured scheme i.e. is insured against anything happening to the deposit. 

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Deposit protection

The deposit must be protected within 30 days of the tenancy agreement start date and the landlord has to provide the tenant with specific information called Prescribed Information:

  • The address of the property
  • The amount of the deposit
  • How the deposit is protected
  • The name and contact details of the tenancy deposit protection scheme and its dispute resolution service
  • The landlord (or letting agency’s) name and contact details
  • Reasons why the deposit might be withheld e.g. to cover damage caused
  • How to apply to get the deposit back when the tenancy finishes
  • What to do if the landlord is difficult to get hold of at the end of the tenancy
  • Action to take if there is a dispute

Why do we have tenancy deposit schemes?

The purpose of these schemes is to protect tenants against a situation in which, when the tenancy comes to an end, the landlord either can’t or won’t repay the deposit. In order to receive the deposit back at the end of the tenancy a tenant must:
  • Be in compliance with the terms of the tenancy agreement
  • Be up to date with rent and bills
  • Not have caused any damage to the property

At the end of the tenancy

At the end of the tenancy, once both parties are in agreement about how much of the deposit is to be repaid to the tenant this should be done within 10 days. If there is disagreement over how much of the deposit should be retained and how much repaid then landlords and tenants should try to negotiate an agreement between them. However, if this is not possible, disputes can be referred to the scheme’s internal dispute resolution process. This will essentially involve both parties presenting evidence to justify why the deposit should be repaid – or not. This could be emails, photos, statements or bills. What many people don’t realise is that the deposit remains the property of the tenant until a decision has been reached as to how much the landlord is entitled to – this means that it’s up to the landlord to justify their claim.

When the deposit isn’t protected

The requirement to protect a deposit is non-negotiable. An agent can do it on behalf of a landlord but a landlord cannot ask a tenant to do it. Where a deposit isn’t protected a tenant may apply to court to get the deposit repaid to them or to have it paid into a scheme within 14 days. It’s also possible for tenants to apply for compensation for an unprotected deposit, which could be up to three times the amount of the original deposit.

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