Inventories and Tenancy Deposit Protection

In April 2007 the UK Government introduced compulsory tenancy deposit protection for all new tenancies. This is a very important piece of legislation and below we explain the benefits of having a professionally prepared inventory

 

At the end of a tenancy, unless you have a professional independent third party inventory in place to record the condition of the property and any of it's contents, it will be difficult to achieve a successful resolution in the event of a dispute over the return or retention of any part of the tenants' deposit



Failure to compile this type of inventory at the start of the tenancy may result in the tenant automatically receiving the deposit back IN FULL at the end of the tenancy regardless of the circumstances and any claim against it.

 

Landlords or agents must use one of the approved Tenancy Deposit Protection schemes to protect tenants' deposits where these conditions apply

 

The approved schemes have joined forces to produce A Guide to Tenancy Deposits, Disputes and Damages.

 

Choosing a TDP scheme

There are two types of TDP schemes - custodial and insurance based. Any landlord can use the custodial scheme but there are some restrictions on who can use the insurance based schemes.

Tenants can expect a decision as to how much of their deposit is going to be returned to them within ten days from the end of the tenancy. Any part of the deposit kept back at this stage will remain protected in the scheme being used until such time as any dispute is resolved. The exact arrangements depend on the type of scheme used.

 

Custodial scheme

The Deposit Protection Service provides the only custodial TDP scheme.

Under this scheme the Deposit Protection Service holds the deposit money in a bank account. When the tenancy ends, it releases the deposit to the person who is entitled to it.

If you are a landlord based overseas, you must use the custodial DPS scheme, unless you employ a UK-registered letting agent to manage your tenancy.

If you use DPS for tenants using a rent deposit scheme (for example, a council pays the deposit) and your tenant leaves, you can agree with the council or third party to keep the deposit in place for the next tenant.

 

Insurance based schemes

Under insurance based schemes, the landlord or the landlord's agent holds the tenant's deposit and pays a fee to insure it against the landlord illegally keeping the deposit. If the landlord doesn't pay the tenant the amount they are owed at the end of the tenancy, the insurer will pay the tenant and try to get the money back from the landlord.

If your tenants' deposits are paid in instalments as part of a rent deposit scheme, you must use an insurance based TDP scheme.

The only two insurance based providers are:

  • MyDeposits
  • Tenancy Deposit Scheme

You can only use the TDS if you belong to an approved professional body - like a trade association - where members must have client money protection insurance. This insurance ensures that any client money held by a business is protected, even if the person or company goes out of business. Examples of approved bodies under TDS include the:

  • Association of Residential Letting Agents
  • Royal Institution of Chartered Surveyors
  • National Association of Estate Agents
  • National Approved Letting Scheme