It is sensible for both landlords and tenants to have a reasonable understanding of tenancy deposits and how they work.
With a proven track record of letting and managing property across Hammersmith, Chiswick, and Shepherd’s Bush, our team here at Horton and Garton can bring clarity and expert guidance to the forefront of our services.
Whether you are a landlord or tenant, this blog aims to equip you with a comprehensive understanding of tenancy deposits.
Government Regulations on Tenancy Deposits
The Tenant Fees Act 2019 which applies to all tenancies in England, including those in West London, is a pivotal piece of legislation governing tenancy deposits.
This Act stipulates that from 1st June 2019, tenancy deposits must be capped at no more than five weeks’ rent for annual rentals below £50,000, or six weeks’ rent for annual rentals exceeding this amount.
Moreover, the legislation mandates that all deposits must be placed in a government-approved tenancy deposit protection (TDP) scheme within 30 days of receipt.
This ensures the security of the deposit and offers a clear, impartial procedure for resolving any disputes over deductions at the end of the tenancy.
Landlords are required to provide tenants with the prescribed information about where their deposit is held and how it will be managed.
Failure to comply with these regulations can result in significant penalties for landlords.
They may be liable to repay up to three times the deposit amount to the tenant and may find themselves unable to enforce eviction proceedings under a Section 21 notice.
Tenancy Deposit Schemes
It is compulsory for a tenancy deposit to be held in a certified Deposit Protection Scheme. These schemes ensure that the deposits collected by landlords are safely held and that tenants are treated fairly at the end of their tenancy.
In the UK, tenancy deposits are securely held by three government-authorised schemes; the Deposit Protection Service (DPS), MyDeposits, and the Tenancy Deposit Scheme (TDS).
Landlord Obligations
Landlords bear the responsibility of not only protecting tenants’ deposits in a government-approved scheme but also of providing tenants with proof.
Within 30 days of receiving the deposit, landlords must share details regarding the chosen scheme, the process for releasing the deposit, and the procedure to follow in case of a dispute.
Adhering to these obligations is crucial; as mentioned above, failure to do so can result in legal penalties and the loss of eviction rights under Section 21.
Tenant Rights
Tenant rights are clear when it comes to security deposits: Tenants are entitled to have their deposits protected within one of the government-sanctioned schemes listed above, which will ensure the return of their funds provided the terms of the tenancy agreement are adhered to.
In case of disagreements over deductions, tenants have the right to raise a dispute through the relevant protection scheme.
Tenants should be aware of their rights surrounding the safeguarding of deposits to ensure a fair resolution should the end of a tenancy require such action.
Dispute Resolution
Whilst it is not commonplace at the end of every tenancy, landlords will seek to receive compensation from a tenant’s deposit if they deem it necessary. In the instance that a tenant disagrees with the landlord a dispute will arise.
The tenancy deposit protection schemes serve as neutral arbiters to ensure a fair outcome for all parties.
Tenants and landlords are encouraged to communicate and resolve issues informally; however, if an agreement cannot be reached, either party can initiate the scheme’s dispute resolution process.
This process usually involves evidence being submitted by both parties, and an impartial adjudicator assessing the information provided to make a binding decision.
This service is provided at no additional cost, reinforcing a transparent and equitable system for handling deposit-related disagreements.
Check out process
The check out process is a sometimes overlooked part of letting or renting a property but is a crucial step that confirms the condition of the property at the point the tenants have officially vacated. It should be conducted after a professional clean has taken place.
During the check out the condition of the property is assessed against the initial inventory report.
Landlords expect to receive their property in the same state as when the tenancy began, accounting for fair wear and tear.
Any discrepancies or damages can result in deductions from the deposit to cover repair costs.
Both parties should agree on the condition of the property at check-out to sign off on the return of the deposit.
The check out ultimately determines the deposit’s fate.
Tenants can safeguard their deposit by upholding the property’s condition, while landlords must justify any deductions with proper evidence.
What’s the difference between a security deposit vs holding deposit?
A security deposit is taken by a landlord before a tenancy begins as a safeguard against potential damage to the property or unpaid rent.
A holding deposit is a smaller amount paid to reserve a property before an agreement is signed.
The holding deposit ensures the property is taken off the market as the tenant undergoes reference checks, with the sum often deducted from the first rental payment or deposit if the tenancy proceeds.
Rental Property in West London
Whether you are a tenant ensuring the security of your deposit or a landlord safeguarding your property, tenancy deposits are a core part of the process of renting property; it is prudent for all parties to have a good understanding of how the process works.
For specific advice or further assistance, reach out to the dedicated lettings or property management team at Horton and Garton: Contact us.
