- Allow tenants to get all or part of their deposit back when they are entitled to it.
- Make any disputes easier to resolve.
- Encourage tenants and landlords to make a clear agreement from the start on the condition of the property.
You do not have to take a deposit from a new tenant. There are alternatives to the tenancy deposit scheme, these are: a. Not taking a deposit. b. Not taking a deposit and
increasing the rent. c. Not taking a deposit but charging 2 months’ rent in advance.
A method of taking two months’ rent in advance is designed to give added security in the event of a tenant defaulting on their rent payment without the need to take
a deposit. However, the two months advance rent must be used for rent, not for security for rent.
Disputes over deposits are resolved via a tribunal or the County Court. It is important to use an inventory as evidence to support a claim.
Circumstances in which tenants deposit will not be required to be protected
- (1) Lets to companies
- (2) An owner occupier letting part of their house having served a Ground 1 Notice. A ground one notice applies to properties previously occupied by the landlord
- or their spouse as there only, or principle home at some point. The ground one notice signals their intention to return to the property.
- (3) Assured tenancies.
- (4) If the rent charged is in excess of £25,000 per annum.
- (5) Holiday lets
- (6) If a holiday property is let for a holiday and subsequently an out of season holiday let is agreed, provided a Ground 3 Notice is given. A ground three notice
- applies
- to premises that have been used as a holiday let within the last 12 months and have subsequently been let on a fixed term for up to 8 months. Notice must be
- served that the property will be returned to holiday let use.
- (7) If the tenant (or at least one in the case of a joint tenancy) do not occupy the property as their only or main home.
Insurance-based schemes
- The tenant pays the deposit to the landlord
- The landlord retains the deposit and pays a premium to the insurer - the key difference to the custodial scheme
Within 14 days of receiving a deposit the landlord or agent must give the tenant the details about how their deposit is protected including:
- The contact details of the tenancy deposit scheme selected
- The landlord or agent’s contact details
- How to apply for the release of the deposit
- Information explaining the purpose of the deposit
What to do if there is a dispute about the deposit At the end of the tenancy:
- If an agreement is reached about how the deposit should be divided, the landlord or agent returns all or some of the deposit
- If there is a dispute, the landlord must hand over the disputed amount to the scheme for safekeeping until the dispute is resolved
- If for any reason the landlord fails to comply, the insurance arrangements will ensure the return of the deposit to the tenant if they are entitled to it
Custodial schemes
- The tenant pays the deposit to the landlord or agent
- The landlord or agent then pays the deposit into the scheme
At the end of the tenancy:
- If an agreement is reached about how the deposit should be divided, the scheme will return the deposit, divided in the way agreed by both parties
- If there is a dispute, the scheme will hold the deposit until the dispute resolution service or courts decide what is fair.
The interest accrued by deposits in the scheme will be used to pay for the running of the scheme and any surplus will be used to offer interest to the
tenant or landlord if the tenant isn’t entitled to it.
|
