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Do Landlords Have to Take a Deposit?

While landlords are not legally required to take a deposit, it is incredibly rare to find a landlord who will not ask for one.  

Typically, the deposit amount will consist of at least one month’s rent. This is to protect landlords from tenants who leave without paying their final month’s instalment of rent or if landlords need to make any charges for damages to their property. For assured shorthold tenancies, deposits cannot exceed up to six weeks’ worth of rent.

To prevent a landlord from interfering with your deposit, all landlords in England have to protect deposits for assured shorthold tenancies with a rent of up to £100,000 a year into an authorised tenancy deposit protection scheme. There are currently three Government authorised tenancy deposit schemes for landlords to choose from: Deposit Protection Service (DPS), Tenancy Deposit Scheme (TDS), and MyDeposits.

Although the landlord has the right to deduct money from this lump sum, the deposit still legally belongs to you and landlords should only withdraw money from the deposit if there are qualifying circumstances and after giving you notice.

However, the power regarding the deposit does not all lie with the landlord, as through the tenancy deposit schemes all tenants have access to a free service where they themselves can initiate a resolution for deposit disputes with landlords.

What are landlords required to do?

Landlords are required by law to protect their tenants’ deposit through an authorised tenancy deposit scheme within 30 days. When the deposit has been received by the scheme, the landlord must then provide their tenants with information from their chosen tenancy deposit scheme, called Prescribed Information, within those same 30 days.

There are two services a landlord can use to protect their tenants’ deposit, that all three tenancy deposit protection schemes offer: a Custodial scheme or an Insurance Backed scheme.

Custodial schemes are free to use for the landlord. They require the landlord to transfer the deposit to them which they then store for the rest of the tenancy. If there are disputes from either party regarding the deposit, they will adjudicate the disputes and transfer the qualifying sums to both parties. These schemes are supported by earning interest on the deposits that they collect.

Insurance Backed schemes require the landlord to pay an upfront fee to use but following that payment the landlord can keep the deposit in their possession. Disputes at the end of the tenancy are settled by the scheme and then an amount up to the total sum is requested from the landlord. These schemes are insured to protect tenants from landlords who fail to repay.

You will know what scheme your deposit is protected under when you receive your signed Prescribed Information from your landlord.

landlord writing a tenancy agreement

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What if my deposit is not protected?

If you suspect that your landlord may not have protected your deposit, or if you have not received your Prescribed Information, then do not panic as you will still be able to get your deposit back. 

The first thing you should so is confirm that your deposit has not been protected by visiting the tenancy deposit protection scheme websites and entering your details. If you get no match on any of them, then your landlord has likely not protected your deposit as they should have.

If this is the case, then you may be entitled to compensation for no less than your original deposit amount or no more than triple your original deposit amount. You should write to your landlord first explaining to them the situation and the potential repercussions if they do not protect your deposit, but if they do not reply then you have the right to seek compensation through the courts.

You also have an eviction safety net from landlords who have not protected your deposit. A landlord cannot evict you via a section 21 notice if your deposit has not been protected or if they have not provided you with signed Prescribed Information. However, once your deposit has been protected or if they provide the Prescribed Information then a section 21 notice can be served.

women calculating property bills

Getting your deposit back

At the end of your tenancy, some landlords will start the deposit return process by themselves, if not then you will need to contact your landlord and ask for your deposit to be returned.

If you have no rent arrears and have left the property undamaged and as you found it then you should expect for the whole deposit to be returned to you.

If there are damages that need to be repaired or the landlord has to professionally clean the property after you leave then this may affect the amount returned to you. Therefore it is best to keep evidence of inventories and the state of the property when you both move in and out of the property.

Landlords cannot deduct money from the deposit for reasonable wear and tear. For example, natural wear on a carpet in a heavy footfall area.

If you have an agreement with your landlord on the amount that will be returned, then you should expect to receive your deposit within ten days.

However, if you disagree with any charges made by your landlord, then you are entitled to use your tenancy deposit scheme’s alternative dispute resolution (ADR) service. This avenue is open to you within three months of your tenancy end date. You can provide evidence to support your claim and your landlord will provide evidence to support theirs, and both parties will need to accept the decision from the ADR.

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