The Tenancy Deposit Scheme (TDS) has been developed to ensure that the deposits are protected and disputes about their return are resolved swiftly, inexpensively and impartially.
Evolution
The TDS was set up after years of complaints by tenants that many landlords are not returning deposits claiming expenses without justification, relying on tenants reluctance to take the matter to court.
The regulations became enforceable on 7th April 2007. The regulations only apply to deposits paid by tenants with Assured Short Tenancies (ATS) s. They do not apply to ‘common law’ tenancies where the tenant is a limited company, where the rent is over £25,000 pa, or if the landlord lives in the same building as the tenant.
All deposits protected with schemes:
- The Deposit Protection Service – depositprotection.com
- My Deposits – mydeposits.co.uk
- The Dispute Service – thedisputeservic.co.uk
This must be done within 14 days of you paying the deposit to the landlord or his agent. In another 14 days, the landlord or agent must serve a notice on tenant giving information about the scheme to which the deposit has been protected.
Why Deposit?
Many landlords receive a deposit from tenants as a hedge against possible non- payment of rent or damage to property. Naturally when a tenancy ends no disagreement should happen about the return of the deposit. But there are occasions when disputes arise and hardship and inconvenience to both landlord and tenant follows.
It is the Housing Act 2004 that made provision for protection of tenancy deposits and resolution of associated disputes. So the Dispute Service has been awarded a contract by the Government to run a scheme: The Tenancy Deposit Scheme came into effect on 6 April 2007 and that became a cut off date for protection of deposits in Assured Shorthold Tenancies.
Legislative requirements
Any landlord or agent who takes a deposit from a tenant for an Assured Shorthold Tenancy need safeguard in an approved tenancy deposit scheme.
But the tenant must be told which one.
The deposit must be in money.
Any landlord violating these provisions cannot issue S 21 notices and have to pay the tenant compensation three times the deposit.
- The landlord/agent has to submit the deposit to the operators of their scheme when requested.
- There is a different procedure for each scheme in resolving disputes without moving the court
- Time limits are set for the return of the deposit if there is no dispute.
- The Act allows for both custodial and insured schemes.
- For custodial schemes the tenant deposit is protected with an independent third party that is outside the control of the landlord.
- In the case of insured schemes the landlord/agent controls the deposit subject to suitable insurance arrangements.
Privileges under TDS Scheme
- Deposits to remain safe during the tenancy period.
- There will be no dispute at the end of the tenancy
- Deposits will be returned promptly
- Dispute about the return of the deposit will be dealt with fairly by the Independent Case Examiner (ICE).
- The ICE will make a quick decision and the deposit will be paid out without unnecessary delay.
Perils of non-conformity
Failing to protect the deposit and or not serving all the prescribed information to the tenant within 30 days of the landlord/agent receiving the deposit can have the following consequences:
- The tenant can claim the penalty of three times the deposit amount plus the return of the deposit
- The Section 215 of the Housing Act (The Localism Act) and its valid Section 21 notice cannot be served if the deposit is not protected.
