Solicitors Based In Chester Offering Legal Services throughout England and Wales
Solicitors Based In Chester Offering Legal Services throughout England and Wales

Tenancy Deposit Scheme Legal Advice for Landlords

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Deposit protection schemes have strengthened tenants’ rights in recent years, helping to make sure more tenants receive their full deposit back when they leave a property. This is all whilst still giving landlords the right to claim reasonable deductions for cleaning and repairs. This means both landlords and tenants can have added rights regarding deposits which ensures additional safety and security of the funds involved.

It is common practice for landlords to request a monetary deposit from a tenant at the start of the tenancy, to cover any costs incurred when the tenancy is over. However, in recent years this money has not been held by the landlord and is instead placed in a third-party protection scheme.

Landlords will hand the amount over to a deposit protection scheme, designed to hold said money until the tenancy agreement comes to a close. This provides the tenant with protection against unfair deductions, while also ensuring landlords cannot spend the deposit money, such as on a holiday or on items for their own home.


Finding a Deposit Protection Scheme

As a tenant, it is not your duty, but your landlords to find an accredited deposit protection scheme. It is a legal requirement that any deposit taken from a tenant must be protected by a government approved scheme. If you’re not sure if your deposit has been passed on to a third-party protection scheme, ask PDA Law and we will be happy to advise you.

However, unlike cash deposits, if you have given your landlord ownership of a valuable item, this will not be protected. Some landlords allow a tenant to give them ownership of a valuable item, such as an expensive watch or a car, in lieu of a cash deposit. In this instance, the landlord is allowed to retain ownership of the item without signing it over to a protection scheme.

Our team of solicitors has a great deal of experience within this area of the law, and we have helped a number of clients in determining whether their deposit has been put into a scheme. To speak to a member of our team, call 01244 757308 today.

What is a Deposit Protection Scheme?

The tenancy deposit is generally a sum of money which is paid at the beginning of the private tenancy. The money is paid to the landlord as security in case the tenant who is living in the property causes any damage or if there is rent which is overdue.

All of the current government-authorised schemes offer two options:

Custodial Schemes

A custodial scheme is one of two options available for a deposit protection scheme which is also government-authorised. This is essentially where the scheme itself holds the tenant’s deposit throughout the duration of the tenancy.

The administrators for the tenancy deposit scheme are known as the department for communities (DFC) and as of April 2016, the government appointed three scheme administrators which are responsible for operating the scheme. The three administrators operate and handle the tenancy deposit scheme for England, Scotland and Northern Ireland and are known as the following:

  • Letting Protection Service
  • My Deposits
  • The Dispute Service

Within the custodial scheme, the scheme administrator holds your deposit until it is required to be paid back. This way you can rest assured that your deposit is safe, even if your landlord or letting agent goes out of business. This provides tenants with peace of mind, knowing that your deposit is safe and secure. The custodial scheme is free to use and you won’t be charged any additional costs for placing your deposit in safe hands during your tenancy.

If the tenancy ends, then the deposit will be released by the holder according to the agreement by the parties involved. But if the landlord and tenant cannot come to a decision and have disagreed on how to proceed, then the money will only be released once a decision has been made through the court or through dispute resolution.

Once the tenancy has come to an end, getting your deposit back from the custodial scheme can be done in multiple ways. The tenant or the landlord can request to have the deposit repaid from the scheme when the tenancy has ended. This is then followed by a 30-day response time, in which you and the landlord have to agree or disagree with the amount offered. However, a deposit can only be retrieved if the end of the tenancy has been reached or your landlord or their letting agent wants to move the deposit from one scheme to another.

Your landlord will have the ability to pay into the scheme via:

  • Online Banking
  • Telephone
  • Cheque
  • Bank transfer

In the case of the scheme being switched over, the deposit will have to be transferred to another scheme administrator. This can be done at any time through an application by the landlord. It is down to the landlord to lodge a deposit immediately after the agreement to go ahead with the switchover, to keep the deposit safe and secure, as this can affect the landlord and tenant. The scheme administrators must get in contact with the tenants to inform them their landlord has transferred their deposit into a new scheme. At this time you must confirm that the amount that has been transferred is correct.

Insurance-Based Schemes

Unlike the custodial scheme, an insurance-based scheme allows the landlord or named agent to hold the deposit money, once a security fee has been paid.

These types of schemes usually offer a free dispute resolution service should the tenant and landlords face a disagreement over a deposit. Although it is recommended that you seek legal advice in relation to any deposit disputes, especially if you disagree with the verdict of the scheme’s own dispute resolution service.


A Landlord’s Responsibilities

It is a landlord’s duty to protect a tenant’s money using a deposit protection scheme. Within 30 days of receiving the deposit, the landlord must place the money into a protection scheme and provide their tenant with the following details:

  • The details of the deposit scheme used.
  • Information on how to apply for the release of the deposit.
  • Information explaining the purpose of the protection scheme.
  • Advice on what to do if there is a deposit dispute.

Failing to protect a tenant’s deposit can result in fines and legal complications, and may even make it impossible to legally evict the tenant, even when the tenancy agreement expires.

Deposit money must normally be paid back to the tenant within ten days at the end of the tenancy unless there is a dispute over how much will be paid. If you gave your landlord money as a ‘holding deposit’ before the tenancy agreement was signed, this money would not have to be put it into a scheme immediately but should be done so within 30 days of signing the agreement.

Contact PDA Law’s Landlords & Tenants Team

At PDA Law, we have grown into a reputable legal practice helping clients in the North West region as well as across the UK. We are dedicated to providing our clients with an efficient service in which we can be contacted by email, telephone and in person to provide the best advice possible for your case. Here at PDA Law, we are here to help both tenants and landlords with any disputes over deposit schemes and breaches of tenancy agreements. Our expert team of highly skilled and experienced solicitors will provide you with tailored advice to help you every step of the way.

To speak to a specialist solicitor today, simply call 01244 757308 or complete our online contact form and we will be in touch as soon as possible.


Our Team of Lawyers in Chester

Paul D’Ambrogio

Paul D’Ambrogio

Director and Commercial Property & Conveyancing Specialist
Jane Clutton

Jane Clutton

Landlord & Tenant/Housing Disrepair/Tenancy/Tenant Deposit Solicitor

For legal services you can trust, please call us or visit us in our Chester office


What Our Customers Say About Us

Quick & Responsive

Honestly I would recommend PDA for any agency/landlord deposit dispute. Jane was such a dream to work with and she got me a good compensation. She was quick and responsive throughout the whole process as well as transparent. She kept me in the loop with all correspondence with the agency/landlord. She also knows her stuff. Would recommend PDA law.

Odette Akoache

They provided us with realistic timescales

It was our first time we dealt with PDA law for our conveyancing. We were recommended to them by the Property agency. We are glad we had a good experience with PDA law, especially during lockdowns and Christmas period. They made sure, they had all the paper-work in place with all searches done in time. They provided us with realistic timescales, so that there is no disappointment towards the end. Looking forward to deal with them in the near future.

Jameson Banji