If you are purchasing a property for the purpose of renting it out on an assured shorthold tenancy (AST) you should be aware of the legal requirements relating to how the tenants deposit should be held.
All private landlords taking deposits for ASTs are required to safeguard them with a Government Approved tenancy deposit protection (TDP) scheme.
Tenancy Deposit Protection Schemes were introduced from 6 April 2007, to ensure tenants can claim back their deposit providing they meet the terms of their tenancy agreement, do not cause damage to the property, and pay the rent and bills.
There are two types of TDP schemes used by landlords and letting agents, either a ‘custodial’ scheme where the scheme holds the deposit on your behalf for free, or an ‘insured’ scheme where you or your agent holds the deposit but pays the scheme to insure it.
As a landlord you are required to:-
- Protect the tenants deposit in one of the three available TDP schemes within 30 days of receiving it.
- Comply with the requirements of the chosen scheme.
- Provide the tenant with prescribed information within 30 days of receiving their deposit.
If you do not comply with these requirements the tenant could take court action to have the deposit repaid or protected in a custodial scheme within 14 days. The court may also order that you repay up to 3 times the original deposit to the tenant.
Should a dispute arise at the end of the tenancy the TDP schemes will provide impartial dispute resolution.
Be aware there are other factors you must comply with as a landlord when renting out a property, such as providing a Gas Safety Certificate, how to rent guide and an Energy Performance Certificate at a rating of no less than an E. Failure to comply with these requirements will prevent you effectively serving a S21 notice to recover possession of the property.
For more information – call 01206 7034043 or email [email protected]