Deposit protection scheme

All landlords are legally required to use a deposit protection scheme (opens new window) to safeguard deposits taken for assured shorthold tenancy agreements. The landlord must register the deposit with a government-approved scheme.

There are two types of deposit protection scheme:

• insurance-based schemes - where the landlord keeps the deposit but pays a fee to the scheme provider to insure the deposit
• custodial schemes - where the deposit is paid into the scheme

Under certain circumstances, we are able to offer a bond that is a deposit-free alternative with no initial transfer of monies, but guarantees the landlord up to five weeks of damage costs should there be agreed dilapidation at the end of the tenancy.

There are three government-approved schemes:

• Deposit Protection Service (opens new window) - a custodial scheme often used by landlords
• Tenancy Deposit Scheme (opens new window) - an insurance-based scheme aimed mainly at letting agents
• mydeposits (opens new window) - an insurance-based scheme aimed mainly at landlords

The landlord or letting agent must protect the deposit within 30 days of receiving the money and give the tenant details of which scheme the deposit is registered with, along with a copy of the prescribed information.

The deposit should remain untouched until the end of the tenancy.

When the tenancy ends, the landlord and tenant should discuss whether there should be any deductions from the deposit for rent arrears or damages. The tenant should be made aware of any cause for deductions within 10 working days from the end of the tenancy, and within a reasonable time thereafter, should be advised of the amount of those deductions. When an amount is agreed, the landlord should return the deposit as soon as possible.

If the landlord and tenant cannot agree on how much money should be deducted from the deposit, they will have to use the 'alternative dispute resolution' service offered by their scheme provider. The provider will give an impartial evaluation to resolve the situation. This decision is final and monies will be released accordingly.

No, you can only get a possession order from the court if:

• you return the deposit to your tenant in full (or with agreed deductions)
• the tenant has made a tenancy deposit claim and the court has decided the outcome
• the tenant has withdrawn a tenancy deposit claim or the matter has been otherwise settled