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Tenancy Deposit

Tenancy Deposits & Schemes

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 may be disputes concerning the returnable amount.

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

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.

Landlords and Letting Agents
The Tenancy Deposit Scheme came 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 that – 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 and 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 (2007) rule applies if the tenancy is an assured shorthold tenancy.

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.

As a Tenant it is your responsibility to return the property in the same condition as when you 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.

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.
Non Excluded Tenancy
If you live with your landlord as a lodger and share living accommodation, this maybe known as a Non-Excluded Tenancy or Licence.
Excluded Tenancy
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

Bare Contractual Tenancy
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.

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.

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.