tenancy deposit protection scheme explained

Published: 27/10/2020

Tenancy deposit protection (TDP) schemes can leave both tenants and landlords confused.

Below we have set out a guide to explain TDP:

What is TDP?

Tenancy deposit protection schemes were put in place to safeguard renters' deposits from landlords unreasonably deducting some or all of it at the end of the tenancy. TDPs were introduced by the Government in 2007 to mitigate problems between landlords and tenants and to create more transparency.  

How does the deposit protection scheme work?

TDPs aren't complicated. Tenants pay the deposit to the landlord/letting agent, and within 30 days of receipt, the deposit has to be lodged into a tenant deposit protection scheme. By law, the tenants must have details of the scheme that their deposit is held in. There are two schemes: Custodial and Insurance.

The Custodial scheme is free to use, allowing landlords to pay the deposit into a scheme. When the tenancy ends, both parties must agree on the amount of deposit to be repaid.

An insurance-based tenancy deposit protection scheme is when the landlord/letting agent holds the deposit for the duration of the tenancy instead of paying it into the full scheme. They pay the scheme to protect the deposit and are responsible for reimbursing the tenant when their tenancy ends.

If the landlord fails to repay the tenant their deposit, the scheme steps in and gives the tenant what they are owed. The scheme then goes back to the landlord for compensation, and the tenant is unaffected.

Who is protecting my deposit?

Three different TDP scheme providers offer both custodial and insurance-based cover.

·    Tenancy Deposit Scheme (TDS)
·    Deposit Protection Service (DPS)
·    My deposits

What if my deposit is not in a TDP?

All tenancy deposits must be protected, and landlords who don't protect their tenant's deposits can be taken to court; they can be asked to repay up to three times the original deposit.  

How long do landlords have to return a deposit?

At the end of a tenancy, landlords have ten days, from the date you agree any  amount that is to be deducted, to repay the balance of the deposit. If the Landlord and tenant can not agree the deductions, the DPS will look at each case and make a decision; both sides must abide by this decision.

At Circa London property management, all deposits are lodged with the Tenants Deposit Scheme (TDS).

If you are a tenant looking to rent property in London, call us today.
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