What is a tenancy deposit protection scheme?
A tenancy deposit protection scheme is a scheme which seeks to regulate the use of deposits given by tenants to landlords in respect of Assured Shorthold Tenancies. The landlord will need to either give the deposit to a custodian scheme or insure the entire amount. This must usually be done within 30 days. There are three government-approved schemes which your landlord could use:
- Deposit Protection Service (DPS)
- Tenancy Deposit Scheme (TDS)
For more information about tenancy deposit schemes, please visit gov.uk.
Why have they been introduced?
It is estimated that there is as much as £769 million invested into deposits each year. Previously, there had been no regulation to the deductions which were made by landlords and unfortunately this led to some of the more unscrupulous landlords abusing deposits by making excessive deductions and even withholding deposits altogether. The scheme is intended to address this issue and ensure that all deductions are fair and that an independent adjudicator is present through the process.
What are the benefits for landlords and students?
The scheme is naturally a very positive step towards supporting tenants' rights, and in particular offers support to students who may not have the resources to pursue legal action in the event of a dispute. Students can be assured that if their deposit is protected all deductions will be reviewed and it will be ensured that they are fair and reasonable. Landlords too will benefit as the scheme will support those who have reasonable ground for claiming deductions from deposits. In fact, the only “disadvantage” is towards those who had previously abused tenants’ deposits.
How does the scheme work?
The scheme works upon the principle that a landlord will protect the deposit given during their tenancy, using one of the schemes noted above. When the tenancy comes to an end, the tenants should ensure they leave the property as they found it (considering fair wear and tear) and then agree with the landlord how much (if anything) should be deducted from the deposit. If both sides agree the deposit (or agreed proportion thereof) will be returned within a set number of days (this may vary according to which scheme is used).
If, however, there is a disagreement over deductions to be made then an Alternative Dispute Resolution service used free of charge via the deposit protection scheme used. When the Alternative Dispute Resolution service is used both parties are in effect agreeing to abide by the decision of the service and it will act as an impartial and independent adjudicator to ensure that the deductions are reasonable.
What are the different types of scheme available?
There are two types of scheme available: a custodial scheme and an insurance scheme. A custodial scheme means that the landlord will have to hand over the deposit to a deposit protection service and they will keep the deposit secure until it is time to return it or make deductions. Use of these schemes is free of charge. An insurance scheme means the landlord will be able to keep the deposit but must pay to have the full deposit insured. There is no specification as to which type a landlord is required to use.
Who can take part?
Any landlord can take part in the scheme, but all should note that any agreement or contract which is legally considered an Assured Shorthold Tenancy is legally required to participate in the scheme.
My deposit is not protected. What steps can I take to get it protected?
If you believe your deposit is legally required to have been protected, but has not been protected then you can apply to receive a court order instructing your landlord to either return the deposit in full or protect your deposit (so long as it is a legal requirement for them to have done so). If the landlord or agent does not do so, then they can be ordered to repay 3 times the original amount of the deposit by a court of law. For more information for tenants please click here. We would recommend that students who believe that their deposit was legally required to be protected, but it has not been protected, contact the Student's Union Advice & Support Service.