Legislation requires that all Landlords of Assured Shorthold Tenancies in England and Wales join a mandatory tenancy deposit scheme from April 6th 2007.
The scheme only applies to those tenancies created on or after 6th April 2007.
Tenancies created before 6th April 2007 not effected unless a new tenancy agreement has been created.
The aim of the legislation is to ensure that tenants are no longer ripped off by greedy landlords and also to provide an independent resolution service.
There are two types of scheme that a landlord can join:
- Insurance Scheme:
Upon receiving the deposit from the tenant, the landlord keeps it and pays a premium to the insurer. Note that the tenant must be notified within 14 days of which scheme the landlord is using. If there is no dispute then the landlord returns the money to the tenant. If there is a dispute then the amount that is being disputed has to be given to the scheme for safe keeping until the dispute is resolved. If the landlord does not comply then the monies owed to the tenant are paid out of the insurance. - Custodial Scheme:
The landlord pays the deposit to the scheme not retaining any monies. The landlrod must notify the tenant within 14 days of receiving the deposit of which scheme is being used. At the end of the tenancy if the landlord and tenant are in agreement they notify the scheme who will then pay the monies as agreed. If there is a dispute then the scheme will hold the amount in dispute until resolved by the resolution service or the courts.
Under both schemes, as long as the landlord and tenant are in agreement the deposit must be returned to the tenant within 10 days of the end of the tenancy. |
