Tenant Deposit Protection Schemes
Since 6 April 2007, all deposits taken by landlords and letting agents under Assured Shorthold Tenancies (ASTs) in England and Wales must be protected by a tenancy deposit protection scheme. Landlords and letting agents must not take a deposit unless it is dealt with under a tenancy deposit scheme. To avoid any disputes going to court, each scheme is supported by an alternative dispute resolution service (ADR).
There are two types of scheme available with approved providers that landlords and agents can use: Insurance backed and Custodial.
Insurance backed is where the deposit is covered by an insurance scheme and the agent or landlord keep the money in their account. This means deposits can be returned a little quicker when everyone agrees that the tenant should have all the money back.
Custodial is where the landlord or agent pay the money into the deposit schemes bank account and the deposit scheme takes care of paying back the money at the end of the tenancy. This means that should anything happen to the landlord or the agent the tenants can go straight to the deposit scheme and reclaim the money.
Orchard K Lettings uses the custodial based services of My¦Deposits to ensure safety of the tenant’s deposit. www.mydeposits.co.uk
If we are not providing our Fully Management Service, we will normally transfer the tenants deposit to the landlord’s Tenants Deposit Protection Scheme within 5 days of receiving proof that the deposit has been protected by the landlord. There are strict timescales for doing this. If the deposit is not protected the tenant can take legal action against the landlord and significant penalties apply. The court will make an order that you must pay the deposit back to the tenant or protect it with an approved deposit protection scheme. In addition, a further order will be made requiring you pay compensation to the tenant of an amount equal to three times the deposit. It will not be possible to serve a Section 21 Notice on your tenant to regain possession of the property until compliance with the above conditions are met.
TENANCY DEPOSIT PROTECTION - PRESCRIBED INFORMATION
Legislation requires that certain information must be given to the tenant within the prescribed time-frame of a deposit being taken. Whether you use My Deposits, DPS, or the TDS scheme, only some of the information is provided to the tenants by the scheme administration. The remainder must be provided by the landlord or agent.
It is very important that the form is completed fully and accurately, and that you attach to it a printed version of the relevant scheme's Terms and Conditions.
You should also retain evidence that every tenant, has been provided with the information.
Be sure to comply with the above requirements fully and accurately, because penalties to the landlord for non-compliance are heavy.
Where we are providing our Fully Management Service we will handle all of this for you as part of our service.