Landlords' Letting and Management Information
Tenants' Deposits
As part of the new legislation of the Housing Act 2004, new regulations for the holding of tenants’ deposits were brought in as of 6th April 2007.
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Tenancy deposit protection has been brought in:-
- to ensure good practice in deposit handling, so that when a tenant pays a deposit, and is entitled to get it back, they can be assured that this will happen.
- to assist with the resolution of disputes by having an alternative dispute resolution service. It will also encourage tenants and landlords to have in place, from the outset, clear agreement on the condition of the property through best practise, such as the use of inventories, and agreement on the condition of the property.
On an insurance-based deposit scheme:-
- The tenant pays the deposit to the landlord or agent.
- The landlord or agent retains the deposit and pays a premium to the insurer.
- Within 14 days of receiving a deposit, the landlord or agent must give the tenant prescribed information (to be set out in secondary legislation) about the scheme being used.
- At the end of the tenancy, if the landlord and tenant agree how the deposit should be divided, the landlord returns all or some of the deposit.
- If there is a dispute, the landlord or agent must hand over the disputed amount to the scheme for safekeeping until the dispute is resolved.
- If for any reason the landlord fails to comply, the insurance arrangements will ensure the return of the deposit to the tenant if they are entitled to it.
When we are managing a property, the deposit is registered with The Deposit Protection Service. For more information, visit http://www.depositprotection.com.
If we are providing a tenant finder service we will be passing the deposit over to you, the landlord, to comply with the legislation you will need to register as a landlord with one of the deposit protection agencies. We suggest the 'The Deposit Protection Service' as they are free to register and do not require re-registration when a tenant resigns a contract for a further term.
If you fail to do so, the tenant can take legal action against you in the county court. The court will make an order stating that you must pay the deposit back to the tenant or secure it with the custodial scheme, which is known as the Deposit Protection Scheme. In addition, a further order will be made requiring you to pay compensation to the tenant of an amount equal to three times the deposit. You will be unable to serve a Section 21 Notice on your tenant until compliance with the above conditions is met, and the court will not grant you a possession order.
We retain no liability for any loss suffered if you, the landlord, fail to comply.