What is the tenancy deposit scheme?

Since 6th April 2007 all damage deposits taken by landlords must have been safeguarded by a Government approved Tenancy deposit scheme. Landlords can choose which scheme they wish to use and must safeguard each deposit, and inform the tenant which scheme has been used, within 30 days of receiving the deposit

In theory, whilst letting agents fees and advance rent are irrecoverable, the tenancy deposit, less deductions for damage, cleaning costs etc., will be returned to a tenant at the end of a tenancy.

What happens to a tenancy deposit?

Assuming the tenant has signed an assured shorthold tenancy, which most privately rented properties are, their landlord must protect the deposit. Within thirty days of the tenant paying the cash, or cheque, or bank draft, the landlord must protect the deposit by lodging it with a Tenancy Deposit Protection scheme.

The landlord must then provide the tenant with the details of the scheme (there are several different providers), how to get their money back at the end of the lease, and what to do if the landlord can't be contacted to return the money.

What is the Tenancy Protection Scheme and why is it important to tetants?

As the name suggests the scheme is there to protect the interests of the tenant and to ensure their deposit is dealt with fairly and returned in a timely manner. The landlord can choose between a custodial or insured scheme. The former involves the landlord lodging the tenants deposit with the scheme provider who then pays the money directly back to the tenant ( less mutually agreed deductions) at the end of the lease.

The insured model involves the landlord hanging on to the deposit, paying a fee to the schemes provider to 'insure' the money. In this instance it is the landlord's responsibility to return the money to the tenant at the end of the lease.

It is worth bearing in mind that if a landlord fails to protect a deposit, or doesn't return it at the end of the lease, they can face penalties. These include:

• Paying you compensation which could be between one and three times the deposit you paid
• Being unable to evict you using a Section 21 notice

• Having to repay your deposit in full before serving a Section 21 eviction notice