The Housing Act 2004 introduced new legislation that has a major impact in the private rented sector. Tenancy Deposit Protection (TDP) will apply to all new assured shorthold tenancies (AST’s) where a deposit is taken. It will not apply to assured or contractual tenancies (eg Company Lets).
Following pressure from the public and consumer groups, who were mainly concerned about tenants who had difficulty in recovering their deposits at the end of a tenancy, measures were introduced in to the Housing Act to prevent deposits being unfairly withheld by the landlord.
These measures commenced on 6 April 2007. All landlords and agents are required to join a statutory deposit scheme if they take deposits. This means that the deposits are safeguarded and tenants get all or part of their deposit back, if they have kept the property in good condition and are entitled to get the deposit back. Tenancy Deposit Protection offers alternative ways of resolving disputes which aims to be faster and cheaper.
How Does the Tenancy Deposit Scheme Work?
There are two types of schemes. Two insurance based schemes, each supported by Alternative Dispute Resolution (ADR) service and one custodial scheme with ADR. Properties managed by Whites Independent Lettings & Sales have used the Custodial scheme since 6 April 2007.
The Custodial scheme works in the following way:
- The tenant pays the deposit to the landlord or agent
- The landlord or agent pays the deposit into the scheme within 14 days.
- Within 14 days of receipt of the deposit, the landlord or agent must give the tenant prescribed information about which scheme is being used and how it works.
- At the end of the tenancy, if the landlord and tenant agree how the deposit should be dealt with, the landlord and tenant write to the scheme who will send back the deposit according to the agreement.
- If there is a dispute, the scheme will hold the amount in dispute until the dispute resolution service or courts decide what is fair.