Providing that it is stipulated in the tenancy agreement, a deposit can be withheld to cover any loss incurred by the landlord that is caused by the tenant, such as damage to the property or non-payment of rent.
Since 6th April 2007, it has been a legal requirement for landlords who rent a property on an assured shorthold tenancy to protect any deposit taken within 30 days of receipt. The tenant must also be served with the prescribed information and a copy of the deposit scheme leaflet (the DPS also require you to provide a copy of the terms and conditions).
If the deposit has been paid by a third party, they must also be provided with the statutory notice and associated documents.
If your tenancy is not an assured shorthold, you don’t need to protect the deposit.
The deposit must be protected in a government-backed tenancy deposit scheme (TDP). In England and Wales the deposit can be registered with:
Deposit Protection Service, DPS (who offer both a custodial and insured scheme)
MyDeposits (who offer an insured scheme only) and the Tenancy Deposit Scheme
Tenancy Deposit Scheme, TDS (who offer both a custodial and insured scheme).
Scotland and Northern Ireland have separate tenancy deposit schemes.
At the end of the tenancy, a landlord must return the deposit within 10 days of agreeing how much is to be refunded.
If you cannot agree on the deductions, the matter can be referred back to the deposit scheme who offer a free of charge arbitration service. Alternatively, both parties may opt to pursue the matter via the county court (where court fees will apply). Once both parties have agreed to use the deposit scheme arbitration service, each be asked to provide evidence to support their claim. The arbitrator makes a decision based on that evidence. There is no appeal and their decision is final.
If you take a deposit, you should always ensure you have a through inventory. Without documentary evidence of the condition of the property at the start and end of the tenancy, you have almost no chance of winning a dispute regarding the condition in which the property has been left.
An inventory is a schedule of how the property has been provided to the tenant at the start of tenancy. The importance of a properly completed inventory must not be underestimated. During a deposit dispute it will be presented to an adjudicator/court as a true indicator of the condition of the property on the tenancy start date.
The inventory is presented in written format with dated photographs. An inventory (for a tenancy) is not simply a list of items in a property – it also includes a description of the condition and cleanliness at the start of the tenancy.
The inventory may be a crucial factor in a decision if there are disputes between the landlord and tenant and it is therefore a vital piece of documentation.
It should be noted that all items listed on an inventory are the landlord’s responsibility to maintain, unless it is specifically stated otherwise in the tenancy agreement.
In order to ensure your inventory is sufficiently robust and defensible it is always best to use an independent inventory service.