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How Tenancy Deposit Protection Schemes Work

Published on May 21, 2015 by John Stringer in News, Property Investment

In years gone by, many people who were renting properties from landlords were convinced that at the end of their tenancies their landlords would find a way to keep any deposit paid at the start of the tenancy.

While this was not always the case, there were people that did get stung in this way – even a friend of mine who put down £600 deposit at the start of her private tenancy ended up losing it all for various things that her landlord claimed needed to be done at the end of the tenancy. With nothing in place to protect the deposits paid by tenants, many ended up failing to get their deposits back when leaving their properties.


Fortunately, this has changed over recent years thanks to the introduction of tenancy deposit protection schemes. These do exactly what is says on the tin – they provide protection for any deposit paid by a tenant to a landlord or lettings agency, which means greater peace of mind for the tenant and a far better chance of tenants getting back any deposit that they are entitled to at the end of the tenancy. They also provide benefits for landlords, as they offer a simple and safe way to protect deposits received from tenants as well as various other benefits such as dispute resolution services.

The purpose of the tenancy deposit scheme

In short, the deposit protection scheme is designed to ensure that tenants are able to benefit from the peace of mind that comes from having protected deposits. There are three main tenancy deposit schemes that can be used by landlords, which includes:

Deposit protection serviceUnder the law, all assured shorthold tenants must have their tenancy deposits protected by their landlord in one of these schemes. The tenancy deposit protection does not, however, apply to students living in halls of residents or to those who live in the same property as their landlord. In addition to ensuring that your deposit has been protected through a government backed scheme, your landlord also needs to ensure that you are provided with details about the scheme that has been used. This is something that must be done with thirty days of the landlord receiving your deposit.

There are a number of key details that the landlord must provide to the tenant when using one of these protection schemes. This includes:

  • Details about which government backed scheme has been used
  • What the tenant must do in order to get their deposit back at the end of the tenancy
  • What action needs to be taken if there is any dispute over the return of the deposit
  • Name, address and contact details for the landlord/letting agent
  • A deposit protection certificate that is signed by the landlord/letting agent

It is also important to ensure you keep the repayment ID number that the organisations that run the deposit scheme provide, as this is something that may be required in order to get your deposit back at the end of your tenancy. If, as a tenant, you have any doubts with regards to whether your deposit has been placed with one of the appropriate tenancy deposit schemes by your landlord, you can double check quickly and easily via the Internet. You simply need to enter the postcode of the property you are renting, the date that your tenancy commenced and the amount that you gave as a deposit. You will then be able to see instantly whether your deposit has been safeguarded in one of the government backed schemes.

Penalties and restrictions for landlords

It is important for landlords to ensure that they comply with the rules in relation to these schemes, as otherwise there could serious financial penalties to face. As a landlord, this means making sure you get the deposit protected on time as well as ensuring you provide the tenant with the necessary details within the specified timescale. If you fail to do this, you could be forced to pay compensation, which could be up to three times the amount of the deposit.

It is also important to remember that if you, as a landlord, use section 21 evictions to end assured shorthold tenancies, you have to have followed the tenancy deposit rules in order for the notice to be valid. It will not be valid in the event that you have failed to protect the deposit in one of the government schemes on time or if you failed to provide the necessary information to your tenant.

Dealing with disputes through a government backed tenancy deposit scheme

Another key benefit of these government backed tenancy deposit schemes is that they make it easier for disputes between the landlord and the tenant to be dealt with without the need to go to court. An ADR or Alternative Dispute Resolution, is run by each of the deposit schemes and these are free of charge, which means that you can avoid having to deal with court related costs should a dispute arise. Any decision that is made as part of this process has to be accepted by both the tenant and the landlord.

Peace of mind for tenants and landlords

It is important to remember that these schemes do provide valuable peace of mind and protection for tenants and for landlords. In the case of tenants, the peace of mind comes from the knowledge that their deposits are fully protected and at the end of the tenancy they will get back any part of their deposit to which they are entitled. For landlords, there is also protection in that the schemes provide a free dispute service as well as a hassle free way to ensure that tenants’ deposits are properly protected. It is vital, however, for landlords to ensure that the relevant information is provided to tenants so that both parties have confirmation that the deposit has been protected and what they need to do in the event or a problem or to reclaim the deposit.

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About the author
John StringerJohn is professional property investor from Manchester. He is contributing on Genuine Property Buyers with tips for all types of house sellers.

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Property Buyers Code of Practice National Landlords Association Deposit Protection Service