Tenancy Deposit Protection (TDP) Schemes

It is not mandatory for a landlord to take a deposit. However, it is standard practice and is highly recommended. The deposit is a sum paid by the tenant to help protect the landlord in the event of damage being caused to the property by the tenant or non-payment of rent. Here’s some further things to know about deposits:

  • Usually a deposit is equivalent to 4-8 weeks of rent.
  • Deposits are usually taken in advance of tenant check-in, together with the first month’s rent. Note: the deposit should not be confused with the first month’s rent which should be taken at the same time as the deposit.
  • The deposit is held throughout the term of the tenancy. The most common form of tenancy agreement is the Assured Shorthold Tenancy (called Short Assured Tenancy in Scotland) since this allows the landlord to recover the property simply by giving the tenant sufficient notice.
  • Since 6th April 2007 all deposits taken by landlords for assured shorthold tenancies in England and Wales (the majority of tenancies), have had to be protected via the landlord’s participation in an approved tenancy deposit protection scheme.
  • There are three approved schemes, two of which are ‘insured’ and one ‘custodial’ in which the deposit is handed over for safe keeping.
  • Landlords have 14 days from the date they accept a deposit to register it with a scheme and inform the tenants of the details of the protection scheme.
  • At the end of the tenancy, if the landlord and tenant agree how the deposit should be divided, they will tell the scheme what they have agreed and the money will be paid out accordingly. Should there be a dispute over the deposit, the scheme will hold the amount until the dispute resolution service or courts decide what is fair.
  • Both insured and custodial schemes feature dispute procedures that can be called on to settle disputes.
  • Providing the property is left in the same state at the end of the tenancy as it was at the start (fair wear and tear excepted) and there are no rent arrears, you will have to return the deposit within 10 days of the end of the tenancy. If it isn’t, you will have to itemise and agree deductions with your tenant.
  • The tenant is not usually entitled to any interest on the deposit.
  • For further information on the arrangements for holding deposits and Tenancy Deposit Protection, click on the following link: Tenancy Deposit Protection.