Deposit protection is a mandatory part of becoming a landlord and can be confusing. The rules around deposit protection are fairly simple. A landlord must protect the tenant’s deposit and issue the tenant and anyone who paid it on their behalf with ‘prescribed information’ within 30 days of receiving the deposit.
The landlord must protect it in one of the three government authorised schemes, but can choose whether they wish to use custodial where the scheme holds the money at no cost to the landlord, or insured protection where the landlord or agent holds the deposit for a small fee.
Even if the property is managed by an agent, it is the landlord’s responsibility to ensure the deposit is properly protected.
Top tips for getting deposit protection right
- If you accept the deposit in installments, remember that each individual payment would need to be protected within 30 days of receiving each part.
- If you have an agent managing the deposit protection, ask for a copy of the deposit protection certificate – if your agent doesn’t protect the deposit on time then you will be liable for between one and three times the deposit amount.
- If you choose to use insurance-backed deposit protection such as TDS Insured or DepositGuard, include a stipulation in the tenancy agreement about what will happen to any interest the deposit generates at the end of the tenancy.
- Ensure you include in your tenancy agreement all the reasons that you might need to use the deposit – e.g. cleaning, redecoration, damage, removal of items, replacement of items, rent arrears, gardening, etc. If you have not put a clause stating that the deposit may be used to cover loss in the instance then should a dispute arise you may be unable to claim the money from the deposit.
- Ensure you make a thorough inventory and check in/out report which includes the condition, age and cleanliness of all items – this will give you a good starting point in any deposit deduction claims.
- Remember that you must serve the prescribed information along with the scheme leaflet within 30 days of receiving the deposit. It is generally a good idea to have evidence that the tenant received such as their signature or proof of postage.
If you’d like to learn more on deposits, check out our deposits and inventories online learning course which is currently available for 50% off for RLA members and non-members!
*Offer runs May 1st 2017 – May 31st 2017