Tenancy Deposit Schemes

Tenancy Deposit Protection Schemes | UK Tenants Deposit Schemes

The Tenancy Deposit Scheme is a Government backed scheme where the tenants deposit is placed within either an Custodial Administered Account free from interference or an Insurance Scheme where the landlord holds the deposit but pays a premium as ‘insurance’ to pay back the deposit.

The benefits of such schemes outweigh any negatives due to:

  • A deposit held by a third party or backed by an insurer.
  • Any conflict of interest is avoided.
  • At the end of the tenancy both the landlord, tenant and third party must agree what is fair wear and tear, what is negligent wear and tear and what is allowable under the terms of agreement.
  • Within the schemes, these two types of tenancy deposit scheme provide a free dispute resolution scheme.

Insurance Based:

  • The deposit is paid to the landlord.
  • The landlord retains the deposit and pays a premium to the insurer.
  • As a landlord, you must, within 14days give the tenant details on how the money is protected including:
  • The details of the TDS selected.
  • Your details and contact points.
  • How to release the deposit.
  • The purpose of the deposit.
  • If in dispute, what the tenant must do.

Tenancy Deposit Scheme - What happens at the end of the letting period?

Any dispute, the landlord hands over the disputed amount to the scheme until the dispute is resolved.  Click here to read a tenancy deposit case study.

If you, as landlord, with any dispute, fail to comply, the insurer will return the disputed amount to the tenant if so entitled to.

Custodial Scheme:

  • As above, but the deposit is handed to a custodial third party.
  • At the end of the tenancy and there is a dispute, the third party will hold the deposit until agreement by the landlord/tenant or by the court.
  • Any interest gained will pay for the running of the scheme and any extra will be paid to either the landlord or tenant.