Tenancy deposit protection
When you pay a tenancy deposit for an assured shorthold tenancy, the landlord or letting agent must protect your deposit through a government-backed tenancy deposit scheme.
This section explains how the new schemes operate. Most of this information only applies to assured shorthold tenancies that start on or after 6 April 2007.
Why have the schemes been introduced?
The government has introduced the schemes to protect tenancy deposits and provide a fairer system for settling disputes about the return of a deposit at the end of a tenancy. Before introduction of these schemes, if a landlord kept all or part of your deposit, it could be difficult to get it back.
With the new schemes, an independent service helps to resolve disputes about deposits at the end of a tenancy. This service is free for tenants.
Will I be protected by the scheme?
You will be protected by the scheme if you are:
- renting a home from a private landlord or letting agent on or after 6 April 2007
- your tenancy is an assured shorthold tenancy (this applies to most new private tenancies)
- you are paying a deposit
It does not matter whether it is the tenant or someone else, such as a parent, who provides the money for the deposit.
What if I paid a deposit before 6 April 2007?
If your tenancy started before 6 April 2007, then you will not normally be protected by the scheme. However, if you have been given a new tenancy agreement since that date, you should get advice. In this situation, the law does not specifically say that your landlord has to protect your deposit, but the Government has suggested that they should do so. An adviser may be able to help you come to an agreement with your landlord.
What does my landlord or agent have to do?
After you've paid your deposit, the landlord or agent must then protect your deposit using a tenancy deposit scheme. There are two types of scheme available:
- A custodial scheme, where the landlord or agent pays the deposit to the scheme, which will keep it until the end of your tenancy.
- An insurance scheme, where the landlord or agent keeps the deposit but pays insurance premiums to the scheme. This means that the deposit is insured if there is any dispute, and the scheme will repay the tenant the agreed amount directly. The insurance scheme can charge fees to landlords for membership and can require contributions towards the costs of insurance.
It will be up to your landlord or agent to decide what scheme to use. They must then provide certain information to you within 14 days of the day when you paid your deposit. This information includes:
- the landlord or agent's contact details
- which tenancy deposit scheme they are using and the contact details for the scheme
- information about the Tenancy Deposit Scheme
- how you can apply to get the deposit back at the end of the tenancy
- what you can do if there is a dispute about the deposit
Is there anything I need to do?
When you move into a property, it is also a good idea to draw up an inventory. An inventory is a detailed list of the contents and condition of the property and any items provided with it, such as furniture or equipment. Having an inventory can help you resolve disputes at the end of your tenancy about whether you have caused any damage to the property or whether items are missing. It is in your own interests to take care of the property you are renting.
It is also advisable to keep a record of all the rent payments you make either in a rent book or by keeping receipts.
What can I do if my landlord or agent does not provide the required information or has not protected my deposit?
If your landlord or agent hasn't protected your deposit and provided the required information within 14 days, then you can apply to the county court for an order that the landlord or agent should pay the deposit back to you, or protect it in one of the tenancy deposit protection schemes.
The court will also order the landlord or agent to pay you compensation equivalent to three times the value of the deposit you paid. The landlord or agent must do all of these things within 14 days of the court order.
In addition, if your landlord or agent hasn't protected your deposit and provided the required information within 14 days, then there are restrictions on how they can evict you. Normally, landlords of assured shorthold tenants can evict a tenant by giving a minimum of two months' notice and then getting a court order without having to show a reason. This is known as the 'shorthold ground'.
However, if your landlord or agent hasn't protected your deposit and provided the required information within 14 days, then they cannot use the shorthold ground to evict you.
What happens at the end of my tenancy?
When you leave, if you and your landlord or agent both agree on how much of the deposit you should get back, you should get it back within ten days of agreeing.
If your deposit was held in a custodial scheme, you will also receive some interest on the deposit. The custodial scheme will repay tenants direct, either by cheque or by electronic transfer.
Deposits held in the insurance-based schemes will be repaid by the landlord either in cash or by cheque, as they choose. These schemes will not pass on any interest to the tenant.
What if there is a dispute about getting my deposit back?
Your landlord or agent is only entitled to keep all or part of your deposit if they can show that they have lost out financially because of your actions, for example, if you have caused damage to the property or you owe rent.
Ask your landlord or agent for a breakdown of the specific costs that they are taking out of your deposit. Your landlord or agent cannot keep your deposit to cover putting right normal wear and tear. There are rules on what costs can be deducted from your deposit.
If you don't agree that your landlord or agent should have kept all or part of your deposit, or you disagree with some of the costs that they have taken out of it, then the tenancy deposit protection scheme your landlord or agent has used will offer a free service to help resolve disputes. Information on what you need to do if there is a dispute will be contained in the information your landlord or agent will have given you at the start of your tenancy (see above).
Each scheme will contain an Alternative Dispute Resolution (ADR) service. When a dispute occurs, and if you and your landlord both agree to use the service, you will have to agree to accept its decision and will not be able to apply to the courts.
If you or your landlord does not agree to use the ADR service then the dispute will usually go to the County Court.
Find out about all of the self-service advice from Housing Options.