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Deposit Protection Advice

Pitfalls await the unwary
One of the many pitfalls encountered by Landlords includes how to deal with deposits.

At the outset of the tenancy any deposit taken from a Tenant needs to be dealt with properly or there can be very serious consequences.

If you grant a tenancy you may decide to take a deposit as a reserve in case of future problems, for example rent arrears, property damage, cleaning costs, replacement keys or locks etc.

From 6 April 2007 all deposits taken by private landlords must be protected in one of two designated schemes. Both schemes have dispute resolution facilities to settle disputes over the deposit as quickly as possible.

The schemes are:

  • The Custodian Scheme – The deposit is paid, by the Landlord, into a designated account that is held by a scheme administrator, namely the free to use Deposit protection Service.
  • The Insurance Scheme – There are two such schemes available and the Landlord retains the deposit and pays a fee for the service.

Avoid expensive mistakes

There are a number of obligations placed upon Landlords by the taking of a deposit, within 14 days of taking a deposit; prescribed information has to be given to the tenant confirming the details of the scheme.

Moreover, if the information is not supplied or the deposit is not paid into a scheme a Tenant can pursue matters in the County Court and start a claim seeking up to three times the value of the deposit, as a sanction.

Further, a Landlord may be unable to evict the tenant using a Section 21 Notice and any subsequent Possession Claim may be struck out for failure to comply with the law.

We have the knowledge and experience to protect you from falling into this trap and avoiding such sanctions, delay and costs.

Use an inventory to protect yourself

Landlords must prove their loss or damage to the property to the scheme and it is therefore important to protect yourself at the outset by taking photographs of the property and a detailed inventory both before the start of the tenancy and as soon as possible at the end.

This then will allow a proper schedule of dilapidations to be drawn up.

The Dispute Service

My Deposit DPS