Before they can move in to a rental property, tenants typically have to pay a first month’s rent up front, plus a tenancy deposit.

As a landlord, if you let out a home on an assured shorthold tenancy (AST) which began after 6 April 2007, you are legally obliged to place tenancy deposits in one of three government-approved tenancy deposit scheme (TPS).

While different arrangements apply in Scotland and Northern Ireland, in England and Wales landlords must register deposits with one of the following three services, within 30 days of receipt:

  • Deposit Protection Service
  • MyDeposits
  • Tenancy Deposit Scheme

If you don’t have an AST in place, as a landlord you’re entitled to accept high-value items such as a car or a watch in lieu of money. However, the schemes mentioned above do not safeguard these items.

The services listed above ensure tenants eventually get their deposit back as long as they:

  • Pay their rent and any other bills in full and on time
  • Don’t damage the rental property in question in any way
  • Meet the terms of the tenancy agreement

What happens when the tenancy ends?

When a tenancy comes to an end, as landlord you’re obliged to repay the deposit within 10 days of agreeing with your renters the sum that will be returned to them. Should you be in any dispute at this time, the relevant TDP scheme protects the funds until you resolve the issue.

And what about holding deposits?

A holding deposit is paid to ‘hold’ a property ahead of the tenancy agreement being signed. Landlords are not obliged to protect these funds. However, once a tenancy is agreed and has begun, the holding deposit then does become a deposit, and so does require protection.

Deposits a third party makes

Even if someone else pays the deposit on behalf of your tenants, for example their parents or a rent deposit scheme, you will still have to use a TDP scheme.

And what if I don’t register a deposit as legally required?

A tenant has the right to use their local county court if they think you haven’t used a TDP service when you ought to have done.

Should a court find that you as landlord haven’t protected your deposit, it can order you to repay the money to your tenant(s) or to pay it into a TDP scheme within 14 days.

Worse, a court may potentially also order you to pay up to three times the value of the deposit within two weeks of making its order.

Alternatively, at the end of a tenancy, the court can decide a renter or renters won’t have to leave a property if you have failed to use a TDP scheme. This could clearly make things difficult if for any reason you need them to move out.

In other words, you won’t be able to serve a section 21 notice giving people at least two months to leave a property if you haven’t registered a deposit properly.

Finally, should a dispute arise over a deposit, there is a free dispute resolution service available at each of these schemes. (For example, if you disagree with your tenant(s) about the sum to be returned to them.) Using this service clearly isn’t obligatory, but doing so needs to be in agreement with your renters. Both parties must supply evidence, with a final decision made by the TDP scheme.

In short, tenants these days are increasingly savvy and understand their rights. So be aware of your responsibilities as landlord regarding deposit protection. Even if this just slips your mind, the ramifications will be the same. Don’t get yourself in a mess if, for example, your property has been left damaged or dirty – if your deposit isn’t protected, neither will you be in such situations.

Talk to us

Landlords have trusted us for more than 25 years. As the rules surrounding tenancies have changed, we’ve always kept up with the latest developments so our landlords remain compliant with regulations. Get in touch for a chat about tenancy deposit registration today. We’ll make sure you remain on the right side of the law at all times.