What is a tenancy deposit scheme?
Under an assured shorthold tenancy (AST) a landlord must protect a tenant’s deposit by using an authorised tenancy deposit scheme (TDS). The TDS must be operated by an approved scheme administrator. A TDS has two main objectives. These are:
- To ensure that, when a tenant pays a deposit, it is protected so that it can be returned to the tenant at the end of the AST, unless the landlord has a legitimate claim upon it.
- To resolve disputes between landlords and tenants using dispute resolution rather than via the courts.
There are two types of TDS:
- Custodial TDS. This scheme requires the landlord to pay the deposit received from the tenant to a scheme administrator. The scheme administrator then who holds the deposit until the tenancy ends.
- Insurance TDS. In this scheme the landlord retains possession of the deposit. However the deposit is secured by the Landlord paying a fee and an insurance premium to the scheme administrator.
What are a landlord’s obligations under a TDS?
Within 30 days of receipt of the deposit a landlord must:
- Comply with the “initial requirements” of the TDS.
- Give the tenant certain prescribed information. This information should be provided directly to the tenant. It is not sufficient to merely identify the TDS and let the tenant make their own investigations.
What sanctions are available if a landlord fails to fulfil their obligations under a TDS?
- If a landlord fails to comply with the TDS, a tenant can apply to court even if the tenancy has ended.
- The penalty for failing to comply with the TDS will be between one and three times the deposit.
At Newnham & Jordan Solicitors we are able to assist and advise you with regard to Assured Shorthold Tenancies, Tenants Deposit Schemes and related legal matters.
Call us now on 0845 680 7871
This article is intended for general information purposes only and shall not be deemed to be, or constitute legal advice. Newnham & Jordan Solicitors, in Wimborne Dorset, cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article or any external articles it may refer or link to.