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Tenancy Deposits
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A tenancy deposit is a sum of money which can be used to pay for the cost of repairing any damage (but not fair wear and tear) caused by the tenant/s during their tenancy. The tenant will pay a sum equivalent to six weeks' worth of rent at the start of a tenancy. Tenant's with pets will normally pay a higher deposit.
At the end of the tenancy, if the property is left in good condition the deposit money is then returned to the tenant.
Where a tenant has caused some damage or loss at a property (which is not just fair wear and tear) the landlord can make a deduction from the deposit.
Click on a link below to find out more
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The deposit protection rules
Most security deposits received by landlords (and their letting agents) must be dealt with in accordance with tenancy deposit protection rules.
Tenancy deposit protection rules currently apply to:
- New assured Shorthold tenancies where a deposit is taken after 6 April 2007; and
- All tenancies where a deposit was taken prior to 6 April 2007 but where a new tenancy agreement is given to the tenant after that date.
The tenancy deposit protection rules do not currently apply to:
- Tenancies where a deposit was taken before 6 April 2007 and where there has been no renewal of the tenancy since
- Tenancies which are not assured shorthold tenancies (mostly 'common law' tenancies; eg. where the tenant is a limited company, where the landlord also lives in the property or where the rent is over £100,000 per annum or under £250 per annum)
- Deposits that are taken from lodgers.
Most new tenancy agreements are assured shorthold tenancies and the tenancy deposit protection rules apply.
Where the deposit protection rules apply, the deposit taken must be registered with one of the statutory tenancy deposit schemes.
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The deposit protection schemes
There are two types of scheme that landlords and letting agents can use to register tenancy deposits:
- Custodial Scheme - The landlord or letting agent will pay the security deposit to the scheme administrator who will hold this amount for the duration of the tenancy. There is currently only one custodial scheme available to use - The Deposit Protection Service (DPS).
- Insurance SchemesThe landlord or letting agent holds the deposit money, although registers each deposit with the scheme administrators. There are currently two insurance-based schemes available to use – The Tenancy Deposit Scheme and My Deposits.
Phillip James Letting Agents is a member of the custodial scheme run by the Deposit Protection Service (DPS).