Tenancy Deposit Scheme Easy Guide

This article was written on 30 Mar 2007

Here’s a quick and easy guide to the MANIDTORY (for all landlords and letting agents that hold deposits) tenancy deposit scheme introduced on April the 6th 2007.

Who does it apply to?

The scheme applies to EVERY landlord and letting agent in England and Wales where a deposit has been taken from a tenant under an Assured Shorthold Tenancy Agreement (AST), after the introduction date, 6th April 2007.

What is it?

It’s a scheme that essentially protects a tenants deposit; it’s a fancy term for “tenancy insurance”. In the past there has been a high number of disputes in regards to the security deposit. A lot of cases emerged where tenants thought their deposit was being taken away from them unfairly. There are currently three schemes (insurance companies/moderators, whatever you want to call it) that a landlord can join, and they will act as the middleman.

How does it work?

The tenant will pay the deposit to the landlord, and he/she will hold it. Before, some letting agents would hold the deposits; that practise is no longer with in the boundaries of the law. Once the landlord has received the deposit, the landlord should inform the admin of the scheme and assign protection to that tenant’s deposit. At the end of the tenancy shorthold contract the landlord and tenant will agree what happens to the deposit. If the tenant is dissatisfied and complains to the scheme administrator, the landlord will be required to lodge within a set period of time the disputed amount with the Scheme Administrator. When the dispute is resolved, the lodged money will be repaid to the landlord and tenant in accordance with agreement.

What if I disagree with my tenant, and I refuse to give back the amount that the scheme requests?

If nothing can be settled, the tenant will need to obtain a court order.

You can sign up at one of these places:

The Deposit Protection Service (The DPS) – www.depositprotection.com
Tenancy Deposit Solutions Ltd(TDSL) – www.mydeposits.co.uk
The tenancy Deposit Scheme (TDS) – www.td.gb.com

Aims of the scheme:

1. to ensure good practise in deposit handling- when a tenant pays a deposit, they can be assured they will get it back.
2. to assist with the resolution of disputes regarding the security deposit

Why do I have to do it?

Because it’s the law, and you can be taken to court and fined :)

Do I still keep the security deposit?

Yes, you still keep the security deposit; you don’t need to give it the tenancy deposit scheme organisation.

Does it cost anything?

Yes, I’m afraid so. There is an initial sign up fee (regardless of which scheme you use), and then a yearly top up on top of that. From what i’ve seen, it costs about £50 to sign up, £30 for the Deposit Protection Fee (per deposit incl. VAT) and an annual membership renewal fee of about £15. of course, these will vary, and may change in price over time.

UPDATE (01/04/2009): Here’s a Free Deposit Protection Service

Here’s an in-depth overview Tenancy Deposit Protection Scheme (in pdf format) by the government.

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Talk / 26 Comments

Rob Blackie wrote this on 2007-05-25 15:31:03 Just to let you know that the custodial scheme is entirely free. 1
Matt wrote this on 2009-03-23 15:55:04 I am aware that I require by law a gas safety certificate when I let my property, but a 'Landlords Safety Certificate' has been mentioned to me also. What is this? Do I need one? Where do I go to get one? Additionally, do I need any kind of certificate to cover any electrical items in the house? Who could issue this certificate? Do I need to provide fire extinguishers and fire blankets? Where do I find out about what I am required to provide for the tenant? Different people give me different answers, do you hav a definitive one please?
Thanks for any help you can give.

Matt 2
The Landlord wrote this on 2009-03-23 16:21:07 Hey Matt,

A "Gas safety certificate" is often reffered to as a "Landlords Safety Certificate". They're the same thing, as far as I'm aware.

If you let property in Engalnd & Wales you must ensure that electrical equipment and system is safe. There isn't a statutory requirement to have annual safety checks on electrical equipment as there is with gas, but it advisable to do so. But no, there is nothing official you need to provide.

You don't need extinguishers and fire blankets for a tenanted residential properties, only multiple shared properties. Tenanted residential properties just need to have smoke alarms, and all upholstered furnishings provided in a rented property must be fire resistant.

Cheers 3
mike wrote this on 2009-05-27 20:08:54 Dear....

I'm having problems getting my deposit back from my landlord, the thing is I moved out over a year ago and we came to an agreemnt for an amount that he could keep for damages over email in settlement of the dispute which he paid. But afterwards I realized I shouldn't have agreed as he didn't provide receipts and i am now in the process of a claim against him.

Can someone advise whehter I Would still be able to get my money back and would the landlord still be fined even though he's paid the agreed amount by muself?

any comments appreciated



Can someone advise whether 4
mike wrote this on 2009-05-27 20:11:15 sorry I forgot to mention the landlord hadn't secured the deposit.

cheers

mike 5
F wrote this on 2009-07-14 10:45:44 So is the DPS site TOTALLY free? ie no sign up fee etc.

Also which would be the best way to give the deposit for them to hold.
Odv going to let the tenents deposit clear in my account first, but which is best, sending off a cheque or a bank transfer ..?

Thankx! 6
Jools wrote this on 2009-07-14 12:03:30 DPS is totally free - it is paid for via the interest the deposits gather whilst in their custody.

No charge for setting up your account. Bank transfer or cheque - whatever is easier. As long as you have an audit trail for your accounts either method!

Jools 7
Jools wrote this on 2009-07-14 12:05:09 Mike - you need to speak to a legal professional about this or to the CAB. Not securing the deposit could lead to a fine so you need to ensure the information you give is correct and accurate.

Good Luck

Jools 8
The Landlord wrote this on 2009-07-14 14:13:33 Hey F,

Yup, Jools is right. That particular scheme is free because they make money from interest rates i.e they put all the money into a bank and keep the interest.
A lot of schemes do charge, though. 9
richard globe wrote this on 2009-08-15 10:40:54 i am currently dealing with a Wirral Landlady where a local Letting Agent wrongly returned the deposit back to former tenants without even notifying her they were even doing that. Despite requesting the relevant registration paper work from the agent and a promise they would,neither her or me have received nothing. I have recommended to the landlady that she immediately starts a small claims action against the agent. 10
Dun wrote this on 2009-08-15 12:17:09 Hi,

My letting agency has failed to register my deposit. They claim they don't need to because I'm on a "short term" agreement of 6 months. I think they probably do (am I right?). I was wondering whether I am able to withhold my last month's rent?

There hasn't been any damage to my room - if there was I would be happy to pay for it - and I wouldn't be considering taking this step if I thought the agency was trustworthy.

Does anyone have any advice please?

Thanks 11
Dun wrote this on 2009-08-15 12:19:05 Sorry, I forgot to say I would be withholding the last months rent on the assumption that they could keep my deposit (which is of equal value).

Thanks 12
Sarah wrote this on 2009-08-19 09:47:23 Dun, some tenancy agreements say the deposit can't be used to replace rent, so check yours.

The letting agent is wrong - they should have registered your deposit.

As a landlord, I used the DPS (free) last year, and withdrew the money this year when my tenant moved out. I kept a portion of the deposit for damages, which the tenant agreed to by entering their password on the DPS site. Their portion went straight to their bank account and mine straight to me. Really easy to use, and even got £4 interest back! 13
Jamie wrote this on 2009-08-20 10:52:20 Ho do i check if my deposit is protected I don't have a tenant ID for the DPS need help please.

Cheers 14
Jools wrote this on 2009-08-20 11:54:47 If protected you would have received a letter directly from the DPS confirming deposit. Your tenant ID would be on the letter. Jools 15
Jamie wrote this on 2009-08-20 12:16:27 Thank you for that information. I take it then as I have not recieved any letter with my tenant ID number on it that my landlord is breaking the law. What can I do to report this?

When I move what am looking to do soon as repairs are not getting done I want my full deposit back to go towards new stuff for my next house.

Cheers 16
Lulu wrote this on 2009-10-08 20:20:34 I have lost my job and given notice to move. I am unable to pay the last month's rent. All bills are paid and there are no damages to the property. Is it within my rights to ask the Landlord's agent to pay it from the deposit. Desperate 17
The Landlord wrote this on 2009-10-09 07:24:48 Hey Lulu,

It's not with in your rights to do that. But you can try, and your landlord may agree.

Kind regards 18
lindsey wrote this on 2009-10-13 08:17:54 Can anyone give me some advice please. A lady recently signed a tenancy agreement on the 24/8 paid deposit and 1st months rent but after a week decided not to move in (deposit wasn't secured) I have recently moved a tenant in on the 9/10 and previous tenant wants deposit back? is she entitled to it?? as I have now had to pay agency fees please help thanks 19
Richard Globe wrote this on 2009-10-13 08:24:20 Lindsey, good morning.

I am the Secretary of the Merseyside and Wirral Property Landlords Action and Support Group. Yes I can help you with your ongoing problem, but please can you ring me tonight on my mobile 07761-813260 if no further assistance is forthcoming.

Richard Globe 20
jools wrote this on 2009-10-13 10:20:55 Hi Lindsey,

if your proposed tenant signed the AST and has now given back word then she loses her deposit. Legally you are within your rights to insist that she pays the entire AST figure but this depends on how likely it is she will pay!!

She is also liable for your agency fee costs and any reasonable costs associated with getting a new tenant.

You could (if you were very nice) take the costs from the deposit and return the balance but you are under no obligation to do so. It is her decision to surrender the AST - DO NOT ACCEPT her surrender as you will be allowed to proceed with obtaining the full contract amount if you do.

To be clear - she forfeited her deposit the moment she broke the AST contract and has no rights in law to recover it.

Jools 21
The Landlord wrote this on 2009-10-13 10:55:43 Hey Lindsey,

I agree with everything Jools said.

Further more, you had 14 days to secure the deposit, and she moved out with in that period, so that shouldn't be a problem either. 22
Tom wrote this on 2009-11-22 23:46:32 I am a landlord, and I wasn't aware of this until today. I am going to put the deposit in tomorrow but I rented out my place 5 months ago.
How much trouble am I in? 23
sonia wrote this on 2009-11-25 09:41:29 How can I be sure my landlord put my deposit into the scheme? Does he should have document to confirm it?
Thanks 24
niki wrote this on 2010-02-08 20:17:29 Hi,

I didn't know about the deposit scheme and I let out my home, so act as a private landlord. Is it too late to put the deposit into DPS? The tenants have been in the property for 7 months, and the assured shorthold tenancy ended in Dec, which i understand is now a periodic tenancy.

Thanks,
N 25
Jools wrote this on 2010-02-08 21:14:22 Hey Niki,

Unfortunately ignorance of the law is not a defence! Suggest you get the bond submitted asap and see what happens. If your tenants get wind of what you have done (not done) be prepared to pony up 3 x the bond in compensation.

Jools 26

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