Deposit Schemes – What Deposit Schemes are there?
The Deposit Schemes ensure that tenants get their deposits back at the end of the tenancy, if they meet the terms of the tenancy agreement. All landlords must protect their tenants' deposits using a TDP scheme if they have let the property on an assured shorthold tenancy (AST) which started after 6 April 2007.
There are Three Approved Deposit Schemes,The Deposit Protection Service (DPS), MyDeposits and The Tenancy Deposit Scheme (TDS). If a deposit is held in any other scheme there are no guarantees regarding being able to get a deposit returned so make sure its one of these.
These schemes offer two alternative protection methods, one a custodial and the other an insurance-based scheme. Any landlord can use the custodial scheme but there are some restrictions on who can use the insurance-based schemes
The Custodial Tenancy Deposit Scheme
The Deposit Protection Service (DPS) provides the only custodial scheme. In this, the Deposit Protection Service holds the deposit money in their bank account separate from the landlord and when the tenancy ends, it releases the deposit to the person who is entitled to it, hopefully you the tenant. This scheme is used by overseas based landlords as its the only one they can use and also landlords who use letting agents.
The Insurance-based Deposit Schemes
With the insurance-based schemes, the landlord or the landlord's agent keeps the tenant's deposit and pays a fee to insure against the landlord illegally keeping the deposit. In these cases, if the landlord keeps the deposit the tenant is owed at the end of the tenancy the Deposit Schemes insurer will pay the tenant and try to get the money back from the landlord, like with car insurance. Heres more information about Mydepositand heres more info about the TDS
The Basic Deposit Scheme Rules.
Each Scheme provider has their own rules which we will go into in other articles but the basic rules are:-
- Allow you to get the information you need about the TDP scheme provider.
- Tell you that the landlord should provide you with the name and contact details of the scheme, the contact details for the scheme's dispute resolution service and how to apply for the deposit's release.
- Tell you what to do if the landlord or tenant can't be contacted at the end of the tenancy
- How the deposit is protected within the scheme
- Tell you that within 14 days of receiving their tenants' deposits, landlords must give this information to you, the tenant, together with the some essential information about the tenancy such as : the address of the rented property and the amount of deposit paid, the landlord's or letting agency's name and contact details, the name and contact details of any third party that has paid the deposit, items or services covered by the deposit, the circumstances under which the landlord will be able to retain some or all of the deposit and what to do if there is a dispute over how much deposit should be returned