DEPOSIT PROTECTION SCHEMES: TDP is a method used to secure and protect a private tenant’s deposit payment. Landlords must also provide certain information to their tenants.
This guide also explains what happens if your landlord fails to protect your tenancy deposit. There is further advice about disputes and who to contact if you need help.
Are you a tenant renting a home on an assured shorthold tenancy (AST) that started after 6th of April 2007? If so, your landlord must secure your rental deposit in a tenancy deposit protection scheme.
There are three official deposit protection schemes in England and Wales. They are for landlords who rent out property or rooms.
A tenancy deposit protection scheme (TDP UK) can offer two different options:
- Custodial: The scheme would hold the tenant’s deposit for free.
- Insured: Either the landlord or the agent would hold the deposit but you pay the scheme to insure it.
What happens if you used valuable items to secure a deposit instead of money? Examples could include jewellery or an automobile. In this case your landlord would not need to secure the value in a tenancy deposit protection service.
Government-backed Tenancy Deposit Protection Schemes
The protection service gets backed by the government in the United Kingdom. This ensures that tenants will always get their deposit returned in full providing:
- They meet the rental payments and utility bills.
- The tenants do not cause damage to the property.
- They meet all the terms and conditions of the tenancy agreement.
Note: There is a time limit for the landlord or their letting agent to secure the tenant’s deposit. It must go into a scheme within 30 days of receiving the initial down payment.
What Happens at the End of the Tenancy?
At the end of the tenancy term you and your tenant should both agree how much deposit will get returned. Once agreed, the deposit must then get returned within 10 days from that agreement.
What happens if you are in a dispute with your tenants? In this case the deposit remains secured in the tenancy deposit protection scheme until the issue gets settled.
Landlord Holding Deposit
Holding deposits get paid by your future tenants to ‘hold’ or reserve a property before an agreement gets signed. There is no legal requirement to protect a holding deposit.
The holding deposit becomes a genuine deposit once they become your official tenants. That is when you must secure the down payment in a deposit protection scheme for them.
Note: Property agents would need to join one of the ‘client money protection schemes‘ to ensure landlords and tenants get compensated if they are unable to repay their money (e.g. they go into administration).
Tenant Third Party Deposits
A landlord deposit protection scheme must get used even if the deposit gets paid by someone else. This is how tenant third party deposits work. An example of a third party deposit would be through a rent deposit scheme or by the parents of a tenant.
Information Landlords Must Give to Tenants
Landlords must give all the following information to their tenants. You should provide these details within thirty (30) days of receiving the deposit:
- The accurate address of the rented property.
- The total amount of deposit they have paid.
- How the deposit gets protected.
- The name and contact details of the tenancy deposit protection (TDP) scheme and its dispute resolution service.
- The landlord (or letting agency) name and contact details.
- The name and contact details of any third party who paid the deposit.
- Reasons why you would keep some or all of the deposit (e.g. damage to the property).
- How to apply to get the deposit back at the end of the tenancy.
- What to do if they cannot contact you at the end of the tenancy.
- How to deal with a dispute over the amount of deposit due to get returned at the end of the tenancy.
Landlord Failed to Protect Deposit
What can happen if a landlord fails to use a tenancy deposit protection (TDP) scheme when they must do? In this case a tenant can apply to a county court and at any time during the tenancy.
Failing to protect a tenant deposit means the court can either:
- Order you to repay the deposit to your tenant.
- Order you pay it into the bank account of a custodial TDP UK within fourteen (14) days.
Note: court can order you to repay the tenant up to 3 times their original deposit within 14 days of making the order.
What Happens at the End of the Tenancy?
What happens at the end of a tenancy if you failed to use a TDP scheme when you should have done so. In this case, a court may also decide that your tenants do not have to leave the property when the tenancy ends.
Dealing with TDP Disputes
You should contact your TDP scheme free dispute resolution service if there are conflicts. You may disagree with your tenants about how much deposit should get returned. Landlords can also get help and advice from a solicitor or your local Citizens Advice office.