Deposits

From 6th April 2007 all deposits taken by landlords must be safeguarded by one of three Government approved schemes. Landlords can choose which scheme they wish to use and must safeguard each deposit and inform the tenant which scheme has been used within 14 days of receiving the deposit.   In addition to this the legislation requires the Landlord to provide prescribed information to the tenant explaining how the deposit has been protected.  If you fail to give this prescribed information to the tenant then the same penalties apply even though you may have properly protected the deposit itself. The Certificates which the Scheme Administrators provide are not sufficient.  By failing to provide the prescribed information means that you are potentially liable as a Landlord to a penalty of 3 times of the amount of deposit and in the meantime no valid section 21 notice can be served. 

There are two types of Tenancy Deposit Protection scheme:

°             A custodial scheme requiring the landlord to hand over the deposit to the scheme administrator.

°             An insurance-based scheme specifically designed to enable landlords and agents to hold deposits themselves.

Tenancy Deposit Solutions is an insurance backed deposit protection scheme and allows landlords (either directly or through an agent) to hold deposits. This service requires landlords to pay a joining fee plus an insurance premium per deposit and an annual renewal fee.