Over the years, there have been many changes to the letting industry, and deposits have been a part of this. In this blog, we’re letting you know all you need to know about the deposit protection scheme.
What is a tenancy deposit?
Simply put, a deposit is usually required on a rental property to protect the landlord if any damage occurs during the tenancy. If damage is found (that is not labelled as wear and tear), then tenancy deposits can be used to cover the costs of repairing or replacing items.
The tenancy deposit that you are required to pay should be clearly outlined in the tenancy agreement and this is different from a holding deposit. Read our blog on holding deposits.
What is fair wear and tear?
Fair wear and tear is expected changes to furniture or a property over time. It can also be recognised as ‘deterioration in condition of the property due to reasonable use’. Sometimes, disputes can arise regarding what is classed as fair wear and tear and what is unexpected damage. This can be dealt with by the deposit protection scheme.
If a dispute arises, the scheme providers will conduct research into the damage and make a reasonable conclusion based on the evidence. If landlords claim for more excessive wear and tear, it is instead labelled as damage. The deposit protection scheme will use a range of factors, even including the length of the tenancy to determine whether or not the request is reasonable. Other factors can include the number of occupants, the age of the occupants and the general quality of the ‘damaged’ item.
The landlord is required to act responsibly and not attempt to claim for damages that could be labelled as fair wear and tear. As a tenant, it’s important to report any damage to your landlord as soon as possible.
What is the deposit protection scheme?
The need to protect a tenant’s deposit was introduced in 2007, and landlords have been required to adhere to this since then. The main aim of this tenancy deposit protection scheme (TDP scheme) is to protect tenants and increase the chances of them being treated fairly when the tenancy comes to an end. There are many reasons why a tenancy may end.
How do tenancy deposit protection schemes work?
Your landlord or letting agent should make you aware of the tenancy deposit scheme they use. You may also be required to sign up for an account with the deposit protection scheme programme, allowing you to see the progress of your deposit.
There are two main ways that these TDP schemes can work, and it’s up to your landlord to decide which works best for them. One way is that the scheme company would hold the deposit from when the tenancy begins until it ends. Another way is that the landlord keeps hold of the deposit, but pays a fee to protect it during the tenancy.
Landlords must ensure that the deposit is entered into a protection scheme within 30 days of the tenancy beginning.
What are the benefits of a deposit protection scheme?
The main benefit of these schemes for tenants is that they help to keep your money protected. It may also allow you to receive the money back sooner after the tenancy ends.
Another benefit is that these companies can act as an impartial third party should any disputes occur. This can be extremely helpful and can save time and prevent stress in the long run, as issues can be dealt with promptly.
Does my deposit have to be covered by a scheme?
It is a legal requirement for landlords to use a deposit protection scheme for their tenants. This is outlined in the Housing Act 2004 for every assured shorthold tenancy (AST).
Aside from it being a legal requirement, protecting deposits also works in the landlords favour as it means that the money is easily accessible, providing increased financial security. At the end of the tenancy, when the required checks have been completed, the deposit can be returned to the tenant providing that no damage has occurred to the property or its furniture.
Using a high-quality deposit protection scheme can also help to improve the relationship between a landlord and their tenant. This is because it shows that the landlord is proactive and follows regulations. It means that tenants can be confident that their money is safe and will be returned promptly providing that there are no disputes. If there are disputes, these should be dealt with by the dispute resolution service.
We hope this blog has been helpful regarding tenancy deposit protection. We support both landlords and tenants throughout the entire rental process. Please don’t hesitate to contact us if you have any questions – our team will be happy to help.
