Landlords: What you need to know about tenancy deposits There have been a series of amendments to the rules governing tenancy deposits held by landlords, and recent further changes have finally clarified the position. A landlord who grants an Assured Shorthold Tenancy ("AST") on or after 6 April 2007, and takes a deposit must: 1. Protect any deposit received by registering it with an Authorised Tenancy Deposit Protection Scheme within 30 days of receiving it. 2. Give the tenant the “Prescribed Information” in relation to the deposit, within 30 days of receiving the deposit. The Prescribed Information includes generic information about the Authorised Tenancy Deposit Protection Scheme, as well as specific information about the deposit and the AST under which it is paid.
What is an Authorised Tenancy Deposit Protection Scheme? An authorised scheme is essentially a government - backed third party which protects a tenant’s cash deposit. Authorised schemes were introduced to ensure that tenants are treated fairly at the end of their tenancy and to resolve disputes between landlords and tenants. There are two types of authorised scheme: custodial schemes and insured schemes. With a custodial scheme, a landlord registers the deposit and pays it into the scheme. The administrator then holds the deposit in a separate designated account throughout the tenancy. With an insured scheme, the landlord registers the deposit with the scheme, but retains the cash sum. The landlord secures the deposit by paying a fee and premium to the scheme administrator. The administrator will use the premium to pay the tenant, should the landlord misappropriate the deposit.
Do I need to re-protect the deposit if I renew a tenant’s AST? If a deposit is held over following the contractual expiry of an AST, and used in relation to a renewal AST, the statutory requirements will be complied with, so long as the original deposit was protected with an authorised scheme, and the tenant was given the Prescribed Information within 30 days of receiving the original deposit. However, where an AST commenced as a contractual fixed term tenancy before 6 April 2007, and the tenant remained in occupation after 6 April 2007, the deposit originally taken will now need to be registered with an authorised scheme upon entering into a renewal AST, and the tenant will need to be given the Prescribed Information.
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