Accommodation

Housing Bonds/Deposits

Tenancy Deposit Schemes

In April 2007, the Government introduced a new tenancy deposit scheme to ensure that all private landlords in England and Wales, with assured shorthold tenancies, protect their tenants' deposit; either by taking out a special form of insurance or by handing over the deposit to a third party.

Landlords are able to choose between two types of scheme; a single custodial scheme and an insurance based scheme.

Custodial Scheme:

  • The tenant pays the deposit to the landlord
  • The landlord then pays the deposit into the scheme
  • Within 14 days of receiving the deposit the landlord must give the tenant information about the scheme being used
  • At the end of the tenancy, if the landlord and tenant agree how much deposit should be divided, they will inform the scheme which then returns the deposit, divided in the agreed way
  • If there is a dispute, the scheme will hold the amount until the dispute resolution service, or the courts, decide what is fair
  • The interest accrued by deposits in the scheme will be used to pay for the running of the scheme and any surplus will be used to offer interest to the tenant (or the landlord if the tenant isn't entitled to it)

Insurance Based:

  • The tenant pays the deposit to the landlord
  • The landlord retains the deposit and pays a premium to the insurer - the key difference to the custodial scheme
  • Within 14 days of receiving the deposit the landlord must give the tenant information about the scheme being used
  • At the end of the tenancy, if the landlord and tenant agree how much deposit should be divided, the landlord returns the agreed amount
  • If there is a dispute, the landlord must hand over the disputed amount to the scheme for safekeeping until the dispute is resolved
  • If, for any reason, the landlord fails to comply, the insurance arrangements will ensure the return of the deposit to the tenant if they are deemed to be entitled to it

In each scheme, the deposit must be returned within 10 days of the landlord and tenant agreeing how the deposit should be divided, or within 10 days following notification of an ADR (Alternative Dispute Resolution) or Court decision.

What sort of tenancies will deposit protection apply to?

All deposits taken by landlords in relation to Assured Shorthold Tenancies (AST) - the most common form of student leases. Private halls of residence providers (including the College's) are also covered by the legislation.

Does tenancy deposit protection apply to landlords who live overseas?

If a landlord lives overseas but rents a property in England or Wales on an AST and takes a deposit, he/she will have to comply with the legislation.

How can tenants find out if their deposit is protected?

Within 14 days of receiving a deposit, landlords must provide tenants with details of which scheme is protecting the deposit. The scheme will be able to confirm that the deposit is being protected.

What happens if the landlord or tenant cannot contact the other party to agree how much deposit should be returned, or where one party is being uncooperative?

If the landlord is unable to contact the tenant, he can submit a single claim indicating the reason for the claim, including evidence. If a tenant cannot contact the landlord and makes a single claim, no other reason is required and the deposit is returned. A single claim can also be made if both the landlord and tenant are contactable but one party refuses to cooperate, either in agreeing deposit release or agreeing to resolve any issue via ADR or Court.

What happens where parents pay the rent?

Where the deposit is paid for an assured shorthold tenancy by parents, it would still need to be safeguarded by a scheme.

How would the deposit be repaid once an overseas student has returned home?

Schemes will be able to return deposits into foreign bank accounts. There would be a charge for this and would need to be paid by the tenant.