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What is the Tenancy Deposit Scheme?

Phi Spencer

By Phil Spencer

Tenants are required to pay a tenancy deposit to protect the landlord against any damage, or to cover unpaid rent.

What is the tenancy deposit scheme? Why is it beneficial for tenants? We’ve put together our advice for those renting a property.

Government approved tenancy deposit scheme

The tenancy deposit scheme is a government-backed initiative designed to prevent the misuse or unjustified withholding of a tenant’s deposit by unscrupulous letting agents or landlords.

Your landlord should provide you, in writing, details of exactly what your deposit covers. This should also be set out in your tenancy agreement, or in a separate document that you both sign.

Your deposit will either be paid directly to the landlord or a lettings agency. It will typically be between one and three months’ rent.

Regardless of the amount you pay, your deposit must be placed in one of the government's three tenancy deposit protection schemes (these schemes are only applicable in England and Wales. Scotland and Northern Ireland have their own schemes):

Why is tenants deposit scheme in place?

The deposit scheme serves to reassure tenants their money is being held safely and will be returned if:

  • They meet the terms as stipulated in the tenancy agreement
  • They cause no damage to the property, or they have rectified any damage suitably
  • They pay their rent and all of the bills that they owe

Each of the three schemes offers the landlord two options. They can either place a deposit in the scheme, at no charge, for safe keeping. Or, they retain the deposit and pay the scheme to insure it.

Either way, your deposit is protected and the landlord, or the letting agent on their behalf, have 30 days from you handing over the deposit, to pay it into one of the schemes. They are then obliged to inform you of:

  • The scheme that is holding or insuring your deposit
  • Information about the scheme, the amount of deposit held and the property address it relates to
  • Their contact details
  • How you can get your deposit back
  • What happens if deductions are made and you don’t agree with them

Getting your deposit back

At the end of your tenancy, once you have agreed how much (if anything) you owe the landlord, they then have 10 days in which to return your deposit.

This can come via your landlord, or you can approach the tenancy deposit scheme holding your deposit to return it to you directly.

However, it’s worth bearing in mind that the tenancy deposit scheme cannot refund your deposit if the landlord is paying them insurance against it.

How to check a tenancy deposit scheme is in place

If you find out your landlord hasn’t used a tenancy deposit scheme, you can apply to a county court at any point during your tenancy to:

  1. Demand the deposit you paid them be returned to you
  2. Demand they pay it into a tenancy deposit scheme within 14 days

You can check to see if your landlord has paid your deposit into one of the schemes by going to each of them individually and supplying them with:

  • Your rental property postcode
  • Your tenancy start date
  • Your deposit amount
  • Your name

With the introduction of The Deregulation Act 2015, the implications for non-compliance have become far more serious for landlords.

In effect, they cannot serve a Section 21 notice to quit unless they can prove they have complied with the requirements relating to the protection of tenant’s deposits. In other words, if they haven’t complied – they can’t force you to leave the property.

Renting in a new area? Find out all you need to know with Phil Spencer's Property Report, containing information on everything from crime rates to schools. Get your full report here.

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