As a Landlord of domestic premises, you may have requested a security deposit to cover the costs associated with a tenant’s breach of their tenancy agreement. However, you are now legally obliged to lodge your tenant’s deposit in a government-backed tenancy deposit scheme (TDP). Any tenant that has rented their home from you on an assured shorthold tenancy that started after 6 April 2007 must be protected in this way.
Failure to use one of these schemes is unlawful. Furthermore, if you subsequently need to go to court to obtain possession, you will find it very difficult to do so if you have not complied with this legislation.
There are three companies selected by the Government that run Tenancy Deposit Schemes. There are also different types of scheme. One is insurance based where the deposit is kept by the Landlord and a premium is charged by the insurer to protect the deposit. The other form is a custodial service where the deposit is held a selected third party on behalf of the Landlord.
The insurance option may cost between £13 and £22 dependent on the size of the deposit. The custodial scheme usually has no initial charge. Companies offering Tenancy Deposit Schemes include Capita, Computershare and My Deposits (formerly Tenancy Deposit Solutions).
Some of these schemes also offer a dispute resolution service.
For more information speak to one of our residential lettings specialists on 01344 860121.