Deposit protection schemes are essential for maintaining fair and straightforward practices for landlords and tenants in the UK.
Whether you’re a landlord or a tenant, you can use this guide to brush up on your knowledge on the laws around tenancy deposits, helping you to make informed decisions about your let.
What is a tenancy deposit?
As a landlord, you are entitled to request a deposit from your tenants to cover any unforeseen costs that may occur over the tenancy, such as rent arrears or damage to the property.
You can use the deposit to cover these costs, but you cannot use it for damage which constitutes fair wear and tear. For example, faded curtains and worn carpets will likely be covered under fair wear and tear, as these things occur naturally while the property is inhabited.
What is a tenancy deposit scheme?
For all assured shorthold tenancies in England and Wales, landlords have 30 days upon receiving the deposit to protect it under one of three Government-backed schemes:
- Deposit protection service
- MyDeposits
- Tenancy Deposit Scheme
Throughout the tenancy, the deposit must remain protected under a scheme.
Which tenancy deposits need to be protected?
The tenancy deposit protection laws apply to all new tenancies on or after 2007.
Why do I need a property inventory?
You should always invest time into a thorough property inventory before the tenant moves in. An inventory is a detailed report on the condition of the property and its contents which should be carried out before and after the tenancy.
Having dated descriptions and pictures to refer back to will be important in case you need to prove that damage has been made to the property.
Related: What insurance do I need as a landlord?
What information should I pass on to my tenant about their deposit?
As well as having their deposit protected within 30 days, tenants must also be served prescribed information within 30 days, which includes:
- The address of the property
- The total amount paid for the deposit
- The name of the deposit protection scheme used
- The contact details of the tenancy deposit scheme
- Information on how to get the deposit back
- Information on what to do if there is a dispute over the deposit
It is a legal requirement to serve the prescribed information, so you may want to get your tenants to sign a document confirming that they have received the information in good time.
Related: How to decorate your rental home without losing your deposit
When does the deposit need to be returned?
Once you and your tenant have reached an agreement on how the deposit should be returned, the deposit scheme will divide the deposit accordingly and return it. This must be completed within 10 days once you and your tenant have agreed upon how much will be returned.
If a dispute arises, the scheme will hold onto the deposit until the issue is resolved. Therefore, it’s imperative that you notify the deposit protection scheme immediately if there are any disputes.
Related: The top things you should consider before becoming a landlord
What happens if I do not protect my tenant’s deposit?
It is a legal requirement to protect your tenant’s deposit under a scheme, and failing to do so can result in the following consequences:
- The tenant can claim the penalty of three times the deposit amount and a full refund of the deposit.
- You may not be able to evict your tenant easily should you need to if the deposit is not protected.
- The tenant can also defend against any claim made by the landlord for rent arrears as they can request that the court offsets their penalty award against the rent arrears.
These consequences also apply if the landlord fails to supply all the prescribed information to the tenant.
Looking for help with managing your let? Contact your local Whitegates letting agent today
