The Housing Act 2004 has set out new measures to improve the standards of practice for landlords renting out privately within the private rented sector. From 6 April 2007 landlords who take deposits from their tenants have to safeguard the money in an authorised scheme known as the Tenancy Deposit Scheme.
Tenancy Deposit Protection (TDP) applies to all assured shorthold tenancies (ASTs) in England and Wales, where money has been taken as a deposit. The vast majority of tenancies therefore must be protected.
The two main aims are:
• To ensure good practice in deposit handling, in returning deposits and to safeguard them in case of dispute.
• To assist with resolution of disputes by having an alternative dispute resolution (ADR) which can be cheaper and faster than taking court action
The Government has awarded contracts to three companies to run the TDP schemes and there are two main schemes. The details of these schemes are:
Insurance based scheme
The landlord will hold the deposit and pays a premium to a scheme administrator. This will be managed by Tenancy Deposit Solutions and The Dispute Service Ltd and is mainly aimed at landlords and agents respectively who have a large number of properties.
Custodial scheme
This scheme operates by the tenant paying their deposit to the landlord and the landlord paying the money directly to the scheme administrators. Computershare Investor Services Plc is the administrator for this scheme. The Chartered Institute of Arbitrators provide the ADR service for both schemes. This is an independent person who will decide if your money should be returned. Landlords are required to give information to their tenants in prescribed form within 14 days of receiving the deposit. This tells the tenant which scheme is being used.
There is be a dispute service for each scheme (ADR). If a dispute arises and landlord and tenant agree to use the service they will be bound by its decision with no recourse to the courts. Disputes only go to court if the landlord and tenant do not agree to use the ADR service. When a dispute has been resolved, money will be given back to the tenants and landlord. Landlords are encouraged to record the condition of their properties (schedule of condition) and to record items and condition of furniture, (inventory).
Penalties
If the landlord fails to comply with the legal provisions there are remedies available to the tenant. A landlord must provide information about which scheme they have joined, in a prescribed form within 14 days. If they do not do this then landlords will be unable to use a section 21 notice to end the tenancy. The tenant can apply to the court asking for the prescribed information. Failure to comply with this request within 14 days means the court must either;
Order the landlord to pay the deposit back to the tenant or order the landlord to pay the deposit to a scheme.
The court will also be able to order the landlord to pay to the tenant a fine of three times the deposit amount with 14 days.
We recommend you use these sites to find out more or risk the penalties being applied.
Southampton City Council
