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Part 6 - Tenancy Deposit Protection (TDP)

Main aims:

  • To ensure good practice in deposit handling - when a tenant pays a deposit, and is entitled to get it back, they can be assured that this will happen.
  • To assist with the resolution of disputes by tenants/landlords by having an Alternative Dispute Resolution Service (ADR).  Encouraging from the start of a tenancy clear agreement as to the condition of the property and the use of inventories.

Main points:

  • In force 6th April 2007.
  • Introduced to drive up standards in the private rented sector set out in Housing Act 2004.
  • The vast majority of tenancies in England and Wales - Assured Shorthold Tenancies (AST's) must be protected by a Tenancy Deposit Protection Scheme.
  • Only affects New AST's after 6 April 2007.
  • If tenancies are to continue after the initial fixed term of 6 months how the deposit is treated will depend on how the tenancy is continued:

    Period Tenancy - the tenancy continues with no new agreement. TDP will not apply as no new AST will have been created.

    Replacement Tenancy - A new AST is created between the same landlord and tenant for the same property on substantially the same basis - TDP will apply to the initial depsoit that was paid prior to 6 April 2007.
  • A competitive tendering exercise, under European Union procurement rules, is underway to select suppliers to run the schemes.
  • Landlords can choose between two types of scheme:

    - a single custodial scheme
    - insurance-based schemes.

A Single Custodial Scheme

  • The custodial scheme will be free to use by landlords and tenants.
  • The tenant pays the deposit to the landlord.
  • The landlord then pays the deposit into the scheme - the key difference to the insurance scheme.
  • Within 14 days of receiving a deposit, the landlord must give the tenant information about the scheme being used.
  • At the end of the tenancy, if the landlord and tenant agree how the deposit should be divided, they will tell the scheme which returns the deposit within 10 days, divided in the way agreed by both parties.
  • If there is a dispute, the scheme will hold the amount until the dispute resolution service or courts decide what is fair.  Landlords and tenants must agree to use an Alternative Dispute Resolution  (ADR) Service and to be bound by its decision, with no recourse to the courts.  Disputes will only go to the courts if they do not agree to use the ADR service.

The interest accrued by deposits in the scheme will be used to pay for the running of the scheme and any surplus will be used to offer interest to the tenant, or landlord if the tenant isn't entitled to it.

Insurance Based Schemes

  • Landlords will pay a fee (decided by the Administrator) to belong to an insurance-based scheme.
  • The tenant pays the deposit to the landlord.
  • The landlord retains the deposit, the landlord must give the tenant information about the scheme being used.
  • At the end of the tenancy, if the landlord and tenant agree how the deposit should be divided, the landlord, within 10 days returns all or some of this deposit.
  • If there is a dispute, the landlord must hand over the disputed amount to the scheme for safekeeping until the dispute is resolved.  Landlords and tenants must agree to use an Alternative Dispute Resolution (ADR) Service and to be bound by its decision, with no recourse to the courts.  Disputes will only go to the courts if they do not agree to use the ADR service.
  • If for any reason the landlord fails to comply, the insurance arrangements will ensure the return of the deposit to the tenant if they are entitled to it.

TDP's not only protect tenants but also the landlords and although other options have always been open to landlords most will want to continue to take a deposit in order to protect their interests.

For more information please visit the Communities and Local Government website.

Or write to:  The TDP Team Housing Markets Division, Communities and Local Government, Zone 2/10 Eland House, Bressenden Place, London SW1 5DU

Tel: 0207 944 4400.

Message Box  - If you have any questions, comments or complaints you would like us to deal with please let us know

The Housing Act 2004

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