Tenancy Deposit Protection
New legislation affecting tenancy deposits came into force on the 6th April 2007; this legislation has a major impact in the private rented sector. Tenancy Deposit Protection (TDP) is new legislation introduced under the Housing Act 2004 to ensure that when a tenant pays a deposit, and is entitled to get it back, they can be assured this will happen.
All deposits taken for a new Assured Shorthold Tenancies from this date must be protected in a Government-authorised Tenancy Deposit Scheme (this also includes an existing tenancy that is renewed and a landlord agrees a new fixed-term tenancy/extension, the initial deposit taken must then be lodged with a tenancy deposit protection scheme). All landlords must comply with these regulations. Failure to observe the rules & regulations regarding Assured Shorthold Tenancies are harsh:
The Court can make an order stating that you/the Landlord must pay the deposit back to the tenant. In addition to this:
- The Court can make a further order requiring you/the Landlord to pay compensation to the Tenant of between one and three times the amount of deposit.
- The Court could order further costs
- Whilst non-compliant, the landlord will forfeit the right to serve a Section 21 Notice to repossess the property (until either the landlord returns the deposit to the tenant in full or with such deductions as the tenant agrees; or if the tenant has taken proceedings against the landlord for non-protection and those proceedings have been concluded, withdrawn or settled.
The offices of Simon Clarke are members of The Tenancy Deposit Scheme (TDS), which is administered by The Dispute Service.
Different Types of Tenancy Deposit Schemes
There are two types of tenancy deposit protection scheme available for landlords and letting agents (insurance-based schemes and custodial scheme). All schemes provide a free dispute resolution service. This system works entirely on the basis of papers submitted to the adjudicator. Landlords and tenants must have a clear understanding on the condition of the property through best practice. Therefore, we advise landlords that it is necessary to have a comprehensive/professional inventory and schedule of condition and proper invoices and estimates to support any claim. Claims that do not have these are unlikely to be entertained.