Tenancy Deposit Schemes – What Are They And Do You Need To Use One?

11/11/2017

When a tenant moves into your property, it is standard practice to take a deposit to cover the cost of any damage that might occur to the property. This money is usually held until the tenant vacates the property.

When your tenant leaves, you will have the opportunity to check the property for damage, and can retain any money that is legitimately required for repairs. It is now a legal requirement that any deposit placed must be put in a tenancy deposit protection scheme. The money is retained by an independent third party, and landlords must prove damage to be able to keep any of that deposit.

Tenancy Deposits

Most landlords and agents ask for between one month and 6 weeks’ rent as deposit on a new tenancy agreement. Plans to introduce a one-month cap were announced in this year’s Queen’s speech, but this has yet to come into force. Some groups and even private landlords, albeit only a relatively small proportion, have adopted a no deposit policy, but most believe that there is a risk that tenants will leave a property without paying their last month’s rent if they completely scrap deposits.

Prior to the requirement to use tenancy deposit schemes, landlords would hold the money themselves. Some tenants struggled to get their deposit back at the culmination of the tenancy. Disputes meant that tenants would have to wait months before their money was returned, although this obviously wasn’t the case with all tenant and landlord relationships.

The Tenancy Deposit Protection Scheme

The Tenancy Deposit Protection Scheme was launched in April 2007. It was introduced to improve standards within the private rental industry. Primarily, it was meant to protect tenants and to ensure that they had a clearly established route to take to recoup any deposit placed on a property.

It means that a landlord must place the deposit they receive from tenants in a government approved protection scheme within 30 days of receiving the money.

The landlord must also provide written details of deposit, which includes details of the property, the amount of the deposit, and details of the Tenancy Deposit Protection (TDP) scheme that is being used.

Check-In And Check-Out Inventories

When you first agree to a new tenancy, you should get together with your landlord, or their representative, to agree on an inventory list. This is part of a check-in service, and it is recommended that the landlord’s agent and the tenant sign the agreement after checking all the elements on the list. This list will prove important during the check-out procedure and it can help to greatly reduce any disputes that might otherwise occur.

When the tenant leaves the property, the agent and the tenant will compare the condition of every item on the inventory list. While some wear and tear might be expected over time, the landlord can take photos and make deductions from the deposit equating to the amount of money required to put a property back to its original state.

At PDF Estates we offer both check-in and check-out services. We will meet with the tenant. We will create inventories of every item in the apartment or house. We will report on its condition and, when it is time for the tenant to leave the property, we check up on the condition of all these items and check their condition. PDF Estates can also collect the deposit from the tenant and place it in a protection scheme on your behalf. Finally, we will work to resolve any disputes as soon as possible, and we can even arrange to have timely and cost effective repairs or replacements where needed.

What If There’s A Tenancy Deposit Scheme Dispute?

Even with a check-in and check-out, tenancy deposit scheme disputes can still arise. Typically, disputes occur over the cost of making repairs to damaged items or damaged property.

To help remedy disputes, Government approved schemes use impartial adjudicators. These adjudicators will look at the proof and information that they are given, and use this to help them come to a decision. They will decide whether a tenant is responsible for the damage, the cost of putting the damage right, and how much of the deposit they should get back.

In the past, we have found that lack of communication is one of the key reasons for tenancy deposit disputes. Tenants don’t want to speak to landlords if they’ve damaged part of the property, even if the damage was accidental. Landlords are often too busy to properly communicate or to follow up on communication. Using PDF Estates for your landlord management services means that you can keep a line of communication open at all times, reducing disputes and maintaining a positive relationship between all parties.

If it does come down to a dispute regarding who is owed what, we can also help to provide evidence to the deposit scheme company.

Tenancy Deposit Return Time Limit

Another benefit to tenants, of using a tenancy deposit scheme, is timing. In the past, tenants regularly complained that they had to wait weeks or even months before their deposit was refunded by landlords.

Under the tenancy deposit scheme, your landlord or their agent has a period of 10 days to return your deposit, once you have agreed on the amount that is to be returned. This means that the tenant will have access to the deposit that they need, to pay for their next tenancy.

PDF Estates Ltd firmly believes that the key to a positive landlord experience is communication; communication between us, as agent, and landlord is vital, but so too is communication with the tenant. By ensuring a clear line of communication between all parties, we hope to ensure a positive experience for all parties. Call us today on 020 3815 7952 to discuss our check-in and check-out services, or to see how we can help you manage your property portfolio.