Tenancy deposits

Greater protection for tenancy deposits

Landlords taking a deposit in relation to a new tenancy from 6 April 2007 are required to safeguard it under a tenancy deposit scheme. This applies to all new deposits taken in connection with assured shorthold tenancies.

The scheme has two main purposes:

• To protect tenancy deposits
• To help with overcoming disagreements relating to deposits

There are three deposit protections schemes:

The Deposit Protection Service (DPS) - a custodial scheme where landlords must hand over the deposit in full. Free to use and open to all landlords and letting agents, the DPS service is funded entirely from the interest earned from the deposits held. If a dispute arises between the landlord and the tenant at the end of the tenancy, the scheme will hold the disputed amount until the dispute resolution service or courts decide what is fair.

Tenancy Deposit Solutions Ltd (TDSL) - is a partnership between the National Landlords Association and Hamilton Fraser Insurance. This insurance-based tenancy deposit protection scheme enables landlords, either directly or through agents, to hold deposits.

The Tenancy Deposit Scheme (TDS) - is an insurance-backed deposit protection and dispute resolution scheme run by The Dispute Service that builds on a scheme established in 2003 to provide dispute resolution and complaints handling for the lettings industry. The new scheme enables letting agents and landlords to hold deposits.

When a landlord takes a deposit on a new assured shorthold tenancy, they must inform the tenant how it is protected within ten days.

Further information is available from Directgov website. Also you can go to the scheme providers' websites:

• The Deposit Protection Service (The DPS)
• Tenancy Deposit Solutions Ltd (TDSL)
• The Tenancy Deposit Scheme (TDS)
• Shelter
• Citizens Advice