Understanding your Tenancy Deposit
Tenants – Do you understand the legislation surrounding your deposit and how to get your money back? There’s a lot of legislation surrounding your deposit so it’s helpful to understand what it is, how much your landlord can ask for, where it should be held for the duration of your tenancy and how you can get it back!
What is a deposit?
Landlords can ask tenants for a deposit before moving a tenant into a property in case of damage or unpaid bills at the end of the tenancy.
How much can the deposit be? The Deposit Cap.
Any tenancy signed on or after 1 June 2019, has to fall in line with the deposit cap rules from the Tenant Fees Act 2019. The amount taken will depend on the annual rent being charged.
- Where the annual rent is up to £50,000, a maximum of five weeks’ rent
- Where the annual rent is over £50,000 and under £100,000, a maximum of six weeks’ rent
This applies to assured shorthold tenancies, tenancies of student accommodation and licences to occupy housing in the private rented sector in England.
Deposit Protection
Any AST created since 6th April 2007 the deposit must be protected in a government-backed tenancy deposit scheme.
There are two types of schemes;
- Custodial - a free service where the scheme hold the deposit for the duration of the tenancy
- Insured - where the landlord or letting agent holds the deposit and pays the scheme a fee to protect it.
Landlords have several legal obligations, as set out in the Housing Act 2004, that they need to fulfil to ensure the deposit is protected lawfully.
Deposits must be registered within 30 days of the start of the tenancy and the Prescribed Information issued to the tenant within 30 days of receiving it.
Prescribed Information is a specific set of information relating to a tenancy, which the landlord or letting agent is legally obliged to provide to their tenants. They must serve the tenants with the Prescribed Information within 30 days of receiving the deposit. It must contain the following information:
- The amount of the deposit
- The address of the property
- The name, address and contact details of the administrator of the tenancy deposit scheme with which the deposit is held
- The name, address and contact details of the landlord and tenants and any third parties who have contributed to the deposit
Getting your money back
At the end of the tenancy, the landlord or agent has 10 days to return the deposit to the tenant, once an amount is agreed. If there is a dispute over the amount, the deposit will be protected by the tenancy deposit scheme until the issue is resolved by its dispute resolution service where an independent Adjudicator will determine who gets what money.
Adjudication is the decision-making part of the dispute resolution process. Landlords submit their evidence in support of their claim and tenant’s provide their own evidence supporting their position in response. It’s then sent to an independent, impartial adjudicator, who reviews the evidence and decides how the deposit will be repaid.
It’s worth noting that neither the landlord or the tenant will ever be required to meet with the adjudicator. The adjudicator will not visit the property involved in the deposit dispute. This is an evidence-based process. It is therefore clear that a party who cannot produce evidence has a poor chance of winning the argument (hence the importance of an inventory!).
Deposit replacement
You may be offered a deposit replacement product as an alternative to a cash deposit. A landlord or agent cannot require you to use a deposit replacement product but may allow it as an option without breaking the Tenant Fees Act.
There are several different deposit replacement products available. Depending on the product, you may need to pay a non-refundable fee upfront (often equivalent to one week’s rent) and/or a monthly payment for the duration of your tenancy. With most products, you will still be responsible for the costs of any damages incurred at the end of the tenancy or required to pay an excess on any claim for damages or unpaid rent.
It is strongly advised to always check the terms and conditions and to see if it is regulated by the Financial Conduct Authority
Should you have any queries in relation to deposits or any other tenancy related queries please do not hesitate to contact the office, we are here and ready to help.
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