Where must a landlord keep your deposit?
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It is common for a landlord to ask for a deposit when entering into a tenancy. A deposit is often taken as security: if a landlord finds damage to their property caused by the tenant they can repair them by using the deposit supplied by the tenant. This damage might be found during an inventory of the property. You can read our article about inventories for more information.
However, whilst it is relatively routine for a landlord to take a deposit, it is important you handle your tenant's money in the prescribed way.
What must a landlord do with my deposit?
Once you have entered into an assured shorthold tenancy and your landlord has collected your deposit (capped at 5 weeks' rent) they must put your deposit in a government-approved tenancy deposit scheme. If you have not signed your tenancy agreement, you might be asked to pay part of your deposit which will be treated as a holding deposit. Any holding deposit you have to pay does not have to be entered into a protective scheme but it cannot be more than 1 weeks’ rent. There are separate deposit schemes in Scotland and Northern Ireland.
In England and Wales, a landlord must register your deposit with either the:
Deposits must be entered within 30 days of receipt and tenants must be notified of details of the scheme within this timeframe.
Landlord might also accept alternative deposit solutions such as:
- Zero deposit schemes which don't require the deposit to be paid upfront. However, tenants will have to pay the deposit in instalments and deductions can be made from the deposit for repairs.
- Deposit replacement schemes which require a tenant to pay a non-refundable fee to a deposit replacement provider who will then pay the landlord for any damage caused by the tenant and attempt to recover the associated costs from the tenant.
What happens if my landlord doesn't protect my deposit?
The Landlord must protect the deposit within 30 days of receipt and provide the protection certificate to the tenant shortly afterwards. The certificate will contain a unique number which can be used to search the deposit. If you are not sure if your deposit has been protected, you can attempt to locate it by providing key information to one of the protection services such as the deposit amount, the rental start date, address and your personal information. A landlord who has not protected the deposit or provided the prescribed information to a tenant at the start of the tenancy risks paying 1 to 3 times the amount of the deposit to the tenant.
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Your tenancy is over, now what?
Whichever tenancy deposit scheme a landlord has registered with will return the deposit to you at the end of the tenancy. As mentioned before, if a tenant has damaged the property, breached the tenancy agreement, or has rent arrears, they may not receive the full deposit back.
Once the landlord and tenant have agreed on the sums (if any) to be withheld from the deposit, the landlord has 10 days to return the rest.
Resolving tenancy deposit disputes
The tenancy deposit protection scheme provides the landlord and tenant with a dispute resolution service that is free of charge. If a tenant and a landlord cannot agree on the return, if at all, of the deposit it is recommended that they use this service whereby both parties will be asked to produce evidence. The decision of the dispute team is final and both parties must agree to use the service.
If you are a landlord and would like clarification on how to manage your property, we recommend you download our free ‘Property Management for Landlords’ and ‘The definitive guide to Contract Management in 2021’ reports.
For more information, or if you have any further questions, please visit our questions page.
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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.