Deposit protection was made a statutory requirement for tenancies starting after 6 April 2007, by the government and it means that when a landlord takes a deposit on a property they must protect it using one of the government approved schemes. There are in essence two types of scheme.
The custodial schemes are where the deposit is registered along with the address and tenant contacts and then the deposit funds are placed into a separate account which is organised by the deposit scheme. The funds are then left in the account until the end of the tenancy. At this point, the landlord would say if anything was to be deducted from the deposit and the tenant would have to agree to the deductions. If the landlord and tenant cannot agree to the deductions then the case is referred to third-party arbitration. Please note that to make deductions you would need to provide evidence and therefore an inventory is extremely important when renting out your property. The custodial scheme is free to use and is preferred by us.
The other type of scheme is an iinsurance-based scheme. This is where the landlord takes out an insurance premium for the deposit. At the end of the tenancy, the scheme would chase the landlord for any deductions that were deemed unfair. Again an inventory is a major necessity if you find yourself in this position. With both schemes, you must protect the deposit within 30 days of receiving it and you must also provide the prescribed information and the terms and conditions of your chosen scheme WHEN the contract is signed. Of course, if you use View Lettings to rent your property in Central London then we would take care of this for you. Deposits must also be retuned at the end of the tenancy within 10 days.
The punishment for not protecting deposits are very severe. You are not able to serve a section 21 to regain possession if you do not protect the deposit and you can also risk being fined up to three times the deposit amount if you are taken to court. If you wish to discuss deposit protection then please do not hesitate to get in touch and one of our team can talk you through it.