Tenant Deposit Protection
Information provided by Credit Check Services, specialists in screening people.
Landlords are required to place tenant deposits within an approved deposit protection scheme, below is a summary of the schemes and companies operating them.
A summary of deposit protection schemes
Landlords are required to ‘protect’ the tenancy deposit with a government recognised scheme. The legislation is slightly different for Scotland compared to England & Wales. For Scotland the legislation is covered by “The Tenancy Deposit Schemes (Scotland) Regulations 2011, and for England and Wales the legislation is covered by the Housing Act 2004.
The schemes defined for Enlgand, Wales and Scotland are similar in that:
- No fees are paid by the landlord or tenant for the custodial-based deposit protection schemes.
- The landlord must notify the tenant of the scheme used with details of the deposit held.
- The deposit must be paid into the respective scheme within a specified period (as of July 2012 this is a 30 day period for England, Wales and Scotland)
- Where a dispute arises over the return to the tenant of their deposit then a pre-defined process for resolution, including if necessary an arbitrator, will be applied.
For more detailed processes the respective scheme administrator within Scotland or England & Wales should be contacted (companies listed below).
The two types of tenant deposit protection schemes
As of July 2012 there are essentially two types of deposit protection schemes operating in England & Wales, and one type in Scotland, these schemes are:
- The deposit protection service where the deposit is held by the third party administrator. This scheme is available in Scotland, England & Wales
- An insurance backed deposit protection service. Under this scheme if the landlord does not repay the deposit the tenant can seek payment from the insurer, and then the insurer will then try to claim the payment back from the landlord. This scheme is available in England & Wales. Unlike the custodial scheme a fee is payable for the insurance-backed scheme.
Companies operating the deposit protection schemes
Companies operating the respective schemes within the UK (as of July 2012) are:
For England & Wales
- The Deposit Protection Service. Custodial scheme, operated by Computershare Investor Services PLC
- My Deposits. Insurance based scheme, operated by Tenancy Deposit Solutions Limited.
- Tenancy Deposit Scheme (TDS). Insurance based scheme, operated by The Dispute Service Limited.
- The LPS Scotland. Custodial scheme, operated by Computershare Investor Services PLC.
- Mydeposit Scotland. Custodial scheme, operated by Tenancy Deposit Solutions Limited.
- SafeDeposits Scotland
Within Scotland other specific rules may apply, such as the landlord is required to provide a statement to the tenant that they are (or have applied to be) entered on the local authority register under section 82 (registers) of the 2004 Act. The respective deposit scheme administrator will provide the details required for the respective processes to be followed.
One fundamental factor that all landlords should be aware of is they must follow the correct procedure, failure to do so may result in their not being able to recover payment against a deposit. One example is ensuring there is a valid signed inventory of property condition, failure to do so may result in an arbitrator finding in favour of the tenant regarding any damages to the landlord's property.
Are you also seeking to carry out tenant or guarantor checks?
Click on the Login / Register (above, left). Takes 2 minutes (and there are no fees to register).
Next login and go to the section for tenant screening here http://www.credit-check-services.co.uk/services.asp
Select the type of report required (e.g. Bronze, Silver, or Gold, then submit the tenant or guarantor's details in the form presented, and make payment. Your report will be completed within one working day.
If you would like assistance please call Credit Check Services on 01992 719 234.