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Tenancy Deposit Helpsheet

This comes into force for all new tenancies created on or after the 6th April 2007. It is extremely important that Landlords and Tenants are aware of the implications.

Below is a brief summary of the Scheme. To obtain more information, please go the Government’s website on the issue, www.direct.gov.uk/tenancydeposit.

The Scheme

If you have not protected a tenant’s deposit you will be ordered to repay three times the amount to the tenant. So it is important to find out how you can protect deposits and resolve disputes.

Deposits are protected to ensure:

Tenants get all or part of their deposit back when they are entitled to it. Any disputes between tenants and landlords or agents will be easier to resolve. Tenants are encouraged to look after the property they are renting.

The deposit must be protected in a government-authorised tenancy deposit scheme.

This new rule applies if the tenancy is an assured shorthold tenancy.

At the beginning of a new tenancy agreement, the tenant pays their deposit to their landlord or agent as usual. The landlord or agent must then ensure it is protected. Landlords and agents have a choice of three scheme providers, offering two types of scheme to protect the deposit.

Custodial schemes

Money is held by the scheme until it is time for it to be repaid at the end of the tenancy. The custodial scheme is free to use. The landlord simply puts the deposit into the scheme at the beginning of the tenancy. There is one custodial scheme provider.

Insurance-based schemes

Under the insurance schemes, the landlord keeps the deposit and pays the insurance scheme to insure against the landlord failing to repay the tenant any money due to him. There is a choice of two insurance-based schemes.

Within 14 days of taking the deposit, you must provide your tenant with details of how the deposit is being protected.

There is ‘Prescribed Information’, which has to be provided to the tenant. The full list of the information and the relevant Statutory Instrument 2007/797 is available here in PDF format.

Essentially, the information can broadly be divided into two categories:

Firstly, basic tenancy information, this is information which most tenancy agreements of any quality would ordinarily provide, such as tenant’s details, landlord’s details, amount of deposit paid, when and how the deposit will be returned to the tenant or retained by the landlord. This information is contained within agreements ordered from Legalhelpers Limited.

Secondly, detailed information about the scheme into which the deposit has been paid. The individual Scheme providers will provide this information. Currently, there are three scheme providers, but there could be more. The information here is much more detailed.

Terms in the Tenancy Agreement - In relation to the Tenancy Agreement, you do not need to put this information into the Agreement. Rather, the scheme provider will provide all the relevant information to you, which you should then ensure has been passed onto the tenant. However, you must ensure that the tenant has this information. Ideally, you should ask them to sign something to say they have revived it.

In relation to clauses within the tenancy agreement regarding the Tenancy Deposit Scheme, there are no required or necessary terms. However, if you know which scheme you are wishing to use in advance of ordering the Tenancy Agreement, it would be useful although not essential to provide this information and Legalhelpers will automatically include it in the Tenancy Agreement.

In simple terms:

• Legalhelpers Limited ensures all the relevant information required for the first category as detailed above is in the Tenancy Agreement.
• After you have the Tenancy Agreement, you need to place the deposit into one of the schemes and provide this information to the tenant. The Scheme Provider will provide all the information required for the second category at this stage.

Moving out

At the end of tenancy, the condition and contents of the property should be checked against the agreement made at the start of the tenancy. The landlord or agent then agrees with the tenant how much of the deposit will be returned to them.

Within 10 days, the agreed amount of the deposit will be returned to the tenant.

Resolving disputes

If no agreement can be reached about how much of the deposit should be returned, there will be a free help service offered by the scheme which is protecting the deposit.

The Government website provides information about the schemes and contact details. Clearly, it is up to individual landlords to decide which scheme to use, should they take a deposit.

Should you require any further help or assistance, please do not hesitate to contact Legalhelpers by any of the following methods:

Phone: 0870 321 9865

Fax: 0870 321 9866

e-mail: info@legalhelpers.co.uk

Post: Legalhelpers, FREEPOST MID23567, STOKE ON TRENT, ST1 5BR

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