Tenancy Deposit

An assured shorthold tenancy deposit means any money intended to be held (by the Landlord or otherwise) as security for:

  1. the performance of any obligations of the tenant, or
  2. the discharge of any liability of the tenant, arising under or in connection with the tenancy

A landlord cannot require the payment of a tenancy deposit in connection with an assured shorthold tenancy unless the Landlord protects the deposit using a tenancy deposit scheme.

Deposits can only be in the form of money.

Tenancy deposits are managed according to the Housing Act 2004 sections 212-215 and Schedule 10, as amended by the Localism Act 2011.

The Act places three requirements on the Landlord:

  1. Deposits must be protected in an authorised scheme within 30 days of receipt (before 6 April 2012 this was 14 days of receipt)
  2. Tenants must be provided with Prescribed Information about where their deposit has been protected and how the tenancy deposit protection scheme used operates. This Prescribed Information should be provided by the landlord to the tenant within 30 days of the deposit being received. (before 6 April 2012 this was 14 days of receipt)
  3. Any relevant person must be provided with Prescribed Information about where their deposit has been protected and how the tenancy deposit protection scheme used operates. (a relevant person is defined as anyone who has paid a deposit on behalf of a tenant, eg parent, employer, charity) This Prescribed Information should be provided by the landlord to the tenant within 30 days of the deposit being received. (before 6 April 2012 this was 14 days of receipt)

Which tenancy deposits must be protected?

All new Assured Shorthold Tenancy deposits taken on or after 6 April 2007.

Which tenancy deposit scheme should I use?

Custodial scheme

The custodial scheme requires the Landlord to pay the deposit to the scheme, which then holds the tenant's deposit keeping it safe for the duration of the tenancy. There is no charge to the Landlord.

At the end of the tenancy the custodial scheme returns the deposit to the parties in accordance with their agreement.

If there is a dispute the scheme will adjudicate on any proposed deductions by the landlord and will pay the deposit to the parties in accordance with the adjudication outcome.

Insurance backed schemes

All three insurance backed schemes require the Landlord or Lettings Agent to register the deposit with the scheme, paying the scheme a fee to protect it, but the Landlord or Lettings Agent retains the tenancy deposit during the lifetime of the tenancy.

If there is a dispute about any deductions at the end of the tenancy the scheme will then adjudicate on the dispute and will ask the landlord or Lettings Agent to send the disputed deposit to the scheme.

The tenant is protected against loss of their deposit due to bankruptcy of the deposit holder or a failure by the Landlord or Lettings Agent to pay the disputed amount of the deposit to the scheme or the tenant.

What is Prescribed Information?

Each authorised Tenant Deposit Protection Scheme provides a scheme leaflet that explains how the scheme operates. A copy of this leaflet forms part of the Prescribed Information along with:

  1. contact details for the scheme administrator
  2. the amount of the deposit paid
  3. the address of the property to which the tenancy relates
  4. the name, address, telephone number and any email address or fax number of the Landlord
  5. the name, address, telephone number, and any email address or fax number of the tenant, including the contact details that should be used by the Landlord or scheme administrator for the purpose of contacting the tenant at the end of the tenancy
  6. the the name, address, telephone number and any email address or fax number of any relevant person (a relevant person is defined as anyone who has paid a deposit on behalf of a tenant, eg parent, employer, charity)
  7. the circumstances when all or part of the deposit may be retained by the Landlord referring to the Terms of the Tenancy
  8. the Landlord needs to certify (by means of a Certificate) that the information provided is correct to the best of the Landlord's knowledge and belief and to give the tenant the opportunity to sign any such document to confirm that it is accurate to the best of their knowledge and belief.
  9. advice on how the deposit is to be repaid at the end of the tenancy, this may be explained in the Tenancy Agreement or scheme leaflet.