Many landlords will ask for a deposit from a tenant at the start of a tenancy. A deposit can bring peace of mind to a landlord who wants to ensure they can make good any damage caused to the property by their tenants. In many cases, a landlord will require one month’s rent as a deposit.
As a landlord, you have legal responsibilities in dealing with your tenant’s deposit, remember it is not your money.
Section 213(1) of the Housing Act 2004 states that ‘Any tenancy deposit paid to a person in connection with a shorthold tenancy must, as from the time it is received, be dealt with in accordance with an authorised scheme’.
A deposit belongs to the tenant throughout the tenancy, and as a landlord, you are responsible for ensuring that any deposit received is protected in a Tenancy Deposit Scheme (TDS). There are two types of schemes; custodial or insurance, and it is your choice. However, you must secure the deposit within 30 days of receiving it from your tenant.
TDSs were made mandatory in April 2006, and their main purposes are first; to protect tenant money and to ensure that it is returned to the tenant at the end of the tenancy, except to the extent that a landlord has a legitimate claim to any of the deposit and secondly to assist in the resolution of disputes between landlords and tenants through the use of alternative dispute resolution, therefore avoiding the costs of litigation.
Once you have secured the deposit, you must notify your tenant which deposit scheme you have chosen and provide them with details of this.
If you fail to comply with any of the requirements when dealing with your tenant’s deposit, you can be liable to pay up to three times the deposit amount in compensation. You can also be prevented from serving a section 21 notice on your tenant should you wish to remove them from your property in the future.
At the end of the tenancy, the deposit should be returned to the tenant in full. However, if you find that there is work that needs doing to the property due to your tenant’s breach of their tenancy agreement, you can reduce the deposit by the amount to cover the repairs. You must ensure that you notify your tenant of this and seek their agreement to the reduction for the repair.
Landlord and tenant disputes do arise regularly. You may disagree on the reduction to be made to the deposit, or you may have failed to protect the deposit. As a landlord, you must ensure that you have satisfied your legal requirements in terms of the tenant’s deposit, and it is prudent to create an in-depth schedule of conditions before and after the tenancy to document any damage you believe has been caused by the tenant.
If you have protected the deposit, you can access alternative dispute resolution through the tenancy deposit scheme before contacting a solicitor. However, suppose you find yourself in a dispute or would like any legal advice as a landlord. In that case, O’Donnell Solicitors have much experience in landlord and tenant litigation and can offer friendly, straight-talking advice.
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