Tenant deposit protection guide

Landlords take deposits from tenants as insurance against breaching the tenancy agreement, like failing to pay rent, repairing damage and cleaning up when they move on.

Any deposit collected by a landlord as part of an assured shorthold tenancy agreement must protect the money in a government approved deposit protection scheme within 30 days of the tenant paying over the money.

Deposit protection is aimed at stopping unscrupulous or crooked landlords from keeping the money for no good reason when a tenant leaves the property.

If the tenant looks after their buy to let home and leaves without incident, then the landlord should return the deposit in full.

Landlords can keep some or all of the deposit to pay for changing locks, cleaning the home or repairing any damage – but evidence of the expense should be supplied to the tenant to explain why the money is not being returned.

Tenant deposit protection schemes

Three authorised deposit protection schemes are available in England and Wales –

  • The Deposit Protection Service (DPS)
  • MyDeposits
  • The Tenancy Deposit Scheme (TDS)

Landlords letting through an agent should find the management firm already has an account with a deposit protection service.

Regardless of whether they let through a agent or directly to tenants, landlords are responsible for making sure the deposit is on protection within 30 days – and for any fines if the procedures are not followed.

Always ask the agent for confirmation the deposit is protected and check the details of the appropriate  protection service web site.

Proof of protection

The deposit protection service issues a notice with the full details of the deposit which should be served on the tenant within 30 days of the start of the tenancy agreement.

The tenancy agreement starts on the day listed on the first page – not the date when the tenant moves in, so make sure the notice is not served late.

Keep a copy of the notice and tenancy agreement as you will need to supply both if you have to serve any notices to quit or apply for an eviction order.

Penalties

Failing to protect a deposit can result in hefty financial penalties and difficulties in evicting tenants.

Landlords who cannot show they served the protection notice within the 30 day limit may have problems applying for a court order to possess their property.

If a tenant complains to the court that the deposit is not protected, a county court judge can order the landlord pay compensation of up to three times the value of the deposit.

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