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The deposit protection scheme: A landlord's guide

There are few things more important to a landlord than a tenant's deposit. It's a financial safety net against damage to your property or possessions.

But tenancy deposits changed completely in 2007 when it was made law for money to be held in a government-approved protection scheme, rather than with the landlord.

With the ban on tenant fees looking set to come into force from June, deposits are likely to be affected once again.

So, here's a reminder of what the deposit protection scheme means for landlords...

What are tenancy deposit protection schemes?

Essentially, tenancy deposit protection schemes are backed by the government and aim to provide a layer of protection for both landlords and tenants when it comes to deposits.

All Assured Shorthold Tenancy deposits must be placed in one of these three schemes within 30 days:

Deposit Protection Service


Tenancy Deposit Scheme

What is the law of tenancy deposit schemes?

Either you as the landlord, or your managing agent, must lodge your tenant's deposit with one of the three schemes within 30 days of receiving it.

Failure to do so could see your tenant claim compensation and can affect your ability to evict them, should you need to, via a section 21 notice.

How long does a landlord have to return a deposit?

Once your tenancy is finished, you have 10 days to return the tenant's deposit to them once you’ve agreed the amount to be returned.

If you end up in dispute with your tenant about the figure to be given back, the deposit remains with the protection scheme until a resolution is found.

Tenancy deposit scheme benefits for landlords

It's true that tenancy deposit scheme benefits are weighted in favour of tenants.

But there are solid benefits for landlords, too, including maintaining a happy tenant.

One of the main things you try to avoid as a landlord is getting into a deposit dispute with a tenant. It's time-consuming, costly and extremely stressful.

Each of the three tenancy deposit schemes offers landlords and tenants a resolution service, meaning if you do end up in a dispute, there are independent adjudicators on hand to make a decision.

Of course, for a landlord that means ensuring your inventory is accurate and signed off alongside photographs of the property's condition both at the start of the tenancy and at the end.

Tenancy deposit scheme benefits for tenants

In the main, tenancy deposit schemes were introduced to add peace of mind to tenants.

Good tenants, who keep properties in good condition and pay rent on time and in full can be pretty confident their deposit will be returned in full - prior to the 2007 changes, that was not always the case.

What can a landlord deduct from a deposit?

Firstly, tenants must request their deposit from the landlord or managing agent at the end of the tenancy.

If the landlord wishes to make a deduction, they must clearly state how much they wish to deduct and why.

Deductions can only be made if:

* The tenant agrees

* There has been a dispute resolution

* There is a court order

Once again, for your protection as a landlord, a thorough inventory should be carried out at the start and end of a tenancy.

Reasons for a deposit deduction could include:

* Unpaid rent

* Stolen items belonging to the landlord

* Damage to the property or contents beyond fair wear and tear

* Poor hygiene

* Disposal of items left behind after the tenancy

Need to know more about tenancy deposit protection as a landlord or tenant? Speak to one of Martin & Co Camberley’s lettings experts today...

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