The Basic Details on the Tenancy Deposit Protection Scheme for Letting Agents
More than half of letting agents would welcome a course or workshop on how best to comply with the tenancy deposit protection scheme, a report has found. The study, by Tenancy Deposit Scheme, one of the three agencies approved by the government in England and Wales to handle deposits, also illustrated that more than a quarter of agents fear accidentally breaching the regulations and being fined due to a lack of up-to-date knowledge.
Many of the letting agents questioned were also concerned about building up enough evidence in case of a dispute, as well as receiving bad reviews from renters due to the way they handle deposits. With that in mind, this article recaps the basic details you need to know about the tenancy deposit scheme.
What is the Tenancy Deposit Protection Scheme?
The tenancy deposit protection (TPD) scheme is a method to ensure that the deposits paid by tenants before moving into properties can be paid back on moving out. It means that the money will always be available and no tenant will be left out of pocket for money they are owed.
Rather than requiring landlords or letting agents to hold the funds, the government has tasked three bodies with the authority to take in the money and pay it back on request. This is called custodial deposit protection.
However, these bodies also offer insurance deposit protection, where the landlord or letting agent holds the deposit themselves and it is insured by the scheme. Even if the landlord spends the money, the insurance pays the deposit back to the tenant.
What Are a Letting Agent’s or Landlord’s Responsibilities?
Rather than holding it in a bank account, landlords and letting agents must place tenants’ deposits in an approved tenancy deposit scheme. In England and Wales, these are:
● Deposit Protection Service
● Tenancy Deposit Scheme
This is the case for any assured shorthold tenancy that began after 6th April 2007. It does not matter whether the tenant paid the deposit themselves or if a third party, such as their parents, did. All deposits must be held by one of the above schemes.
On receiving the deposit, the letting agent or landlord has 30 days to place it into one of the deposit schemes. It is good practice to inform the tenants that it is now protected and the name of the scheme in which you have placed it, but it is not essential. The tenant can look up the information by visiting each scheme’s website and entering a few details about them and their tenancy if they want to find out.
At the end of the tenancy, both parties must agree on how much of the deposit the landlord will pay back to the tenant. This should then be returned to the tenant within ten days.
If the tenant has kept the property in damage-free condition, has abided by the tenancy agreement and has settled all bills relating to their tenancy, they should receive their full deposit back. However, if that is not the case, the two parties need to decide how much of the deposit should be held back.
If they cannot agree, the TDP scheme holds the funds until the dispute is resolved.
How to Prepare for Disputes
In order to be able to prove that a tenant should relinquish some of their deposit, you should amass as much proof as possible.
Taking photographs during the inventory at the start of a tenancy means you are able to compare and contrast the state of the property with how the tenants leave it. Being able to show two contrasting images of the same location helps your case when proving that damage occurred. You should also include any quotes and receipts for remedying the issues, as these prove your costs for making the situation right.
Keep all details of rent payments and ensure you check the final bills for all utilities when the tenant leaves the property to see that they have been paid.
Another good idea is to make certain that your tenancy agreements include everything that is important to you as a landlord or letting agent in terms of the tenants’ responsibilities. If there is any vagueness about the clauses, it may harm your case in a dispute. Make sure the tenant knows exactly what is expected of them.
Outsource Property Management
You can outsource your property management to Executive Property Management Solutions and not have to worry about drawing up a watertight tenancy agreement or dealing with the end of tenancy admin. We take care of these tasks and more when you outsource to us, so contact us today to find out how we can help.