Tenant deposit scheme
As of April 6 2007 (under the provisions of the Housing Act 2004) every landlord/letting Agent that takes a deposit for an Assured Shorthold Tenancy in England and Wales must join a Tenancy Deposit Scheme.
The deposit acts as a safeguard should the tenant cause any damage to the property. It is well known for landlords to be very slow in returning deposits at the end of the tenancy or to make unfair deductions. The purpose of the new regulations is to ensure good practice in this area and prevent disputes between tenants and landlords.
How it works
There are two types of scheme; insurance backed or custodial. Under the insurance backed scheme the landlord or letting agency pays a premium to the scheme but retains the deposit whereas with the custodial scheme the deposit is transferred to the scheme within the 14 day timescale.
The tenant pays over the deposit (commonly one months’ rent) in the usual way when the Tenancy Agreement is signed. The landlord or letting agency has 14 days from the commencement of the tenancy to provide the tenant with details of the scheme that they are using.
