When you rent a property, you pay a deposit to the landlord, either directly or via the estate agent. This deposit can be used to help secure the property – where it is known as a holding deposit – and then used, upon moving in, as a deposit that is stored in an approved deposit scheme. This deposit is then kept until the end of the tenancy with deductions for damages, missed rent or breaches of the tenancy agreement made as necessary. Anything that is left must then be returned to the tenants. Sometimes no deductions will be made, and the full amount can be returned.
Landlords must return the deposit within ten days of an agreement on how much will be returned. Should a dispute be raised, the deposit will remain protected until a resolution can be found with a payment normally being made 28 days from the adjudicator reaching their decision.
Does a landlord have to hold a deposit in a deposit protection scheme?
Yes. Although the deposit to secure the property does not require safeguarding in any particular scheme. It is only once tenants move in that a deposit must be placed in an approved tenancy deposit scheme. These could be a custodial scheme, where the deposit is held by the scheme itself for the duration of the tenancy or an insured scheme. An insured scheme is where the landlord or agent keeps the deposit until the end of the tenancy but must give it to the scheme if there is any dispute raised.
However – and this should be noted – the deposit protection scheme for tenants only applies if the rented property is on an assured shorthold tenancy agreement that started after April 6th, 2007. Should the property not be an assured shorthold tenancy, a deposit does not have to be placed into any kind of scheme. In fact, landlords can accept valuable items as a form of deposit should the property not be on an assured shorthold tenancy.
What is a deposit protection scheme?
A deposit protection scheme is a government-approved way to keep the tenancy deposit you pay safe. There are currently three places where a landlord or agent can register your deposit. These are:
- Tenancy Deposit Scheme
- MyDeposits
- Deposit Protection Service
These schemes will hold the funds until the tenancy ends and ensure the agreed amount is returned to you if you have kept up to date with rent payments, looked after the property as expected and met the terms of your tenancy agreement.
How long can a landlord hold a tenancy deposit before putting in a deposit protection scheme?
From the moment you pay the deposit, the landlord or letting agent has thirty days in which to pay the money into the chosen deposit scheme. Upon receiving your deposit, they must not only pay it in the relevant scheme, but they should also provide the tenants with the following:
- The address of the rented property
- The value of deposit
- How the deposit is protected
- The name and contact details of the scheme the deposit has been placed in and its dispute service
- How you can get your deposit back
- Why they may keep some or all of the deposit
- The details for the letting agent if one was used
- Contact details should the landlord not be available upon the end of the tenancy
- What to do if there is any dispute over the return of the deposit
How do I get my deposit back from my landlord?
This will depend on whether your deposit is in a custodial or an insurance scheme. If it was placed in a custodial scheme, and there are no disputes raised, the landlord or letting agent should automatically return it to you within ten days of the tenancy ending. If this hasn’t happened, you should request it but allow 5-10 days for it to be processed.
When the deposit is held in an insurance scheme, you will need to request the return of the deposit from the landlord or agent.
How long does a landlord have to tell me of any deposit deductions?
There is no set rule on this, meaning that potentially, the deposit could sit within the scheme for some time. However, it would work in the landlord’s favour to inform you as soon as possible. That way they can avoid long drawn-out disputes that could cost significant sums. It would be reasonable to expect any deductions to be made known to you within ten days of the tenancy ending. Should no information have been passed on in this time, you should raise a dispute.
What happens if the landlord does not return the deposit?
If your tenancy has ended, you’ve requested your deposit back and nothing has happened, you can make a claim to the tenancy deposit protection scheme. They will look at your claim and investigate why the deposit has not been returned. If they find that no valid reason can be given, they will order the landlord to pay it back to you in full. Penalties may also apply which could see the returned amount equal up to three times the deposit value.
Note that you can only raise a claim once two weeks have passed since your initial request for the return of the deposit. Should the deposit be with an insurance scheme, you’ll need to acquire a court order confirming that you have not received your deposit and forward this to the appropriate scheme. Just be aware that should you go via the courts, you may not see your deposit returned for several months as the legal processes are worked through.
How much can a landlord deduct from my deposit?
There is no set answer to this. Much depends on why the landlord is deducting anything from your deposit. If, for example, you have missed a month of rent, the landlord will likely deduct this amount from your deposit. Should the amount of rent missed exceed the deposit value, the landlord could take legal action to recover the funds.
Property damage is another common reason for deductions from the deposit, however, the deductions must be a fair reflection of the costs for the repairs.
Perhaps the most common reason for deducting anything from a deposit is the cleanliness of the property at the end of the tenancy. What constitutes a dirty property though can be open to interpretation and what one sees as clean, another may see as dirty. This often leads to a dispute being raised as both parties argue their case.
Faulty items are also a common reason a landlord may hold the deposit or make deductions from it. A tenant should safeguard themselves by ensuring a complete inventory is taken at the start of the tenancy so that when they move out, there is evidence to support the claim that the disputed faults were there when the tenancy started.
Whatever the reason for the deduction, the tenancy agreement must state what deposit deductions could be made. If it is not included in the agreement, the landlord can’t really enforce a claim to hold the deposit.
When can a landlord not hold your deposit or make deductions from it?
The examples we gave above are justifiable deposit deductions that a landlord can make. Sometimes though, a landlord may attempt to keep more of the deposit for reasons that justify you raising a dispute. These could include:
- Deductions for wear and tear: General wear and tear is not a justified reason for making any deductions from a deposit. A tenant should always ensure photos are taken at the start and end of the tenancy to help support their claim. It would be unreasonable for a landlord to expect every single aspect of the property to remain exactly how it was at the start of the tenancy. That being said, a tenant has the responsibility of taking care of the home and keeping any signs of wear to a minimum.
- Redecorating: Whilst a landlord could hold some of the deposit back for redecoration repair if a tenant had done a poor job, they cannot keep any of the deposit if they simply wish to redecorate a room and freshen up the home.
- Re-letting costs: The deposit cannot be kept or have deductions made on it to cover the costs of re-letting the home. However, should a tenant breach the tenancy agreement by breaking it early, a landlord may be able to make a claim.
- Structural repairs: If the property requires structural repairs to make it safe, the landlord cannot use the deposit to help cover these costs.
Finally, should a dispute be raised relating to the deposit, the landlord is forbidden from using the deposit to cover any dispute-related costs.
Should you be looking for a rental property in Epsom or the surrounding areas, contact our team at Cairds. We ensure deposits for rental properties we let are held in a custodial deposit protection scheme or, where the landlord is a private member of a deposit scheme, lodged by the landlord in the scheme directly. Speak to our Epsom lettings office today to find your new rental home with added peace of mind your money is protected