Landlord deposit schemes


On 6 April 2007 the rules changed regarding the deposit a landlord receives from their tenant.

A Tenancy Deposit Scheme was introduced as part of the Housing Act 2004. All landlord deposits for an Assured Shorthold Tenancy (AST) below a value of £25,000 per annum are now required to be placed in a protection scheme.

ASTs are the most common form of agreement used for the letting of a property between a private landlord and a tenant. The changes reflect the need to ensure tenants are treated fairly by landlords and letting agents in getting their deposits back at the end of their tenancy agreement. The protection scheme allows tenants to claim their deposits more easily and avoid the need to go to court.

Deposit schemes

There are two different types of protection schemes, custodial and insurance.

A custodial scheme is one in which a tenant pays the landlord the deposit and then the landlord places the deposit with a custodial scheme, providing the tenant with the details of what scheme was used. With an insurance scheme the tenant pays the deposit to their landlord who then registers the tenancy and the deposit amount with an insurance scheme and pays for the premium.

Details of the insurance scheme should again be provided to the tenant once registered. There are three Government approved protection schemes: 

  • Deposit Protection Service (DPS), a custodial scheme
  • My Deposits, an insurance scheme run by Tenancy Deposits Solutions Ltd
  • Tenancy Deposit Scheme, an insurance scheme run by Dispute Service

Failure to register with a Tenancy Deposit Protection Scheme allows a tenant to apply for a court order for the landlord to provide details of which scheme was used. If the court finds a landlord failed to register they can ask the landlord to pay their tenant an amount of three times the deposit as a penalty.

If you would like more advice on landlord deposit schemes, then Contact Law can put you in touch with a local law firm with specialist property solicitors free of charge. Please call us on 0808 129 5759 or complete the web-form above.

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