If any landlord has an Assured Shorthold Tenancy in England and Wales and receives a deposit from their tenant, they are obliged to protect it in one of three Government-backed tenancy deposit schemes:
- Deposit Protection Service (DPS)
- Tenancy Deposit Scheme (TDS)
The deposit scheme will hold the deposit and release it at the end of a tenancy. It is always the landlord’s responsibility to ensure the deposit is protected, even if you use a letting agent.
There are two types of tenancy deposit protection scheme available for landlords and letting agents: insurance-based schemes and custodial schemes.
The tenant pays the deposit to the landlord and then the landlord retains the deposit and pays a premium to the insurer.
The tenant pays the deposit to the landlord or agent and then the landlord or agent pays the deposit into the scheme. This option is most commonly used by landlords.
The deposit must be protected within 30 days of receiving the deposit (this may not necessarily be the same date as when the tenancy starts) and the tenant must also be served prescribed information within 30 days, which includes:
- The address of the rented property;
- The amount taken for the deposit;
- Details of which deposit scheme was used to protect the deposit;
- The contact details of the tenancy deposit scheme used and its dispute resolution service;
- The name and contact details of any third party that has paid the deposit e.g. the Letting Agent;
- Information on how the tenant can apply to get the deposit back;
- Details of what the tenant can do if there is a dispute over the deposit.
Serving the prescribed information is not merely a procedure, it is a legal requirement. Securing the tenancy alone is not enough. It has also been advised by a solicitor to request that tenants sign a document to confirm that they have actually received the information.
To summarise, the legislation applies to every landlord in England and Wales that has taken a deposit from a tenant under an Assured Short hold Tenancy Agreement. The deposit must be protected within 30 days of receiving it, even if you’ve only received a partial amount of the deposit. You must servethe prescribed information after the deposit is secured and to the tenant within 30 days.
Failure to comply with the relevant scheme would entitle the tenant to apply to the County Court for an order for repayment of the deposit. In addition the Court can order the landlord to pay to the tenant a sum equal to three times the deposit. Failure to comply with the scheme also prevents a landlord from serving a section 21 notice for possession