What is the Tenancy Deposit Scheme?

🕑 5 minute read

When you rent a house or flat, you’ll usually be expected to pay a deposit, which the landlord keeps until the end of your tenancy.

The Tenancy Deposit Scheme was introduced in 2003, to keep your money safe while you live at a rental property.

What is a rental deposit?

A rental deposit is a refundable payment the landlord holds throughout your tenancy. The landlord can make fair deductions for any damage you may cause during your tenancy.

A deposit is typically the equivalent of one month’s rent. Landlords can’t legally ask for more than the equivalent of five weeks of rent (or six weeks if your annual rent is more than £50,000) as a deposit.

Tenancy deposit scheme
Landlords can ask for no more than the equivalent of five weeks of rent (or six weeks if your annual rent is more than £50,000) as a deposit

What is the Tenancy Deposit Scheme for?

A major worry for renters is a landlord making deductions from your deposit without good reason, or concern about how long it will take them to return your money once you move out.

The Tenancy Deposit Scheme was designed to mitigate these issues, by placing your deposit in a government-authorised protection scheme.

The landlord or agent must tell you where your deposit is being stored, and the money must be paid into the scheme within 30 days of you moving in.

There are two types of scheme – Custodial and Insurance-backed:

  • A custodial scheme holds on to the deposit on your landlord’s behalf.
  • An insurance-backed scheme lets the landlord hold onto the money, but if there’s a dispute at the end of the tenancy, they have to hand it to the scheme until the dispute is resolved.

A Tenancy Deposit Scheme has plenty of benefits for the renter, including:

  • It keeps your money safe during the course of your tenancy.
  • You know exactly when and how you’ll get your deposit back, and you can query the terms ahead of signing any agreement.
  • An independent body will get involved if there is a dispute, so it isn’t just your landlord’s word against yours.

What happens at the end of my tenancy?

If your tenancy is ending and there’s no dispute, your landlord should return your money as soon as possible, minus any deductions you have agreed to.

But if there is a dispute, or no dispute has been raised but you haven’t had your deposit back within 10 days, you can contact the Tenancy Deposit Scheme.

They will request any disputed deposit be paid to them while they investigate, and will usually make a judgement within 28 days.

Disputes can be based on a completely withheld deposit, or deductions for damage that you don’t agree with.

The Tenancy Deposit Scheme can only make a judgement based on the evidence provided, as they won’t hold a hearing or visit the property. So, there are a few things you can do to help sway their decision in your favour:

  • Take photos of the property and contents when you move in, and do the same when you move out, so the landlord can’t claim you’re responsible for damage that was already there.
  • Get a professional cleaning firm in when you move out and keep the receipt, so the landlord can’t claim you didn’t clean when you left.
  •  Keep a record of all correspondence with your landlord so if you requested repairs, or replaced items during your tenancy, you can show evidence of your good character.

What is the landlord deposit scheme law?

Although landlords are required to use a Tenancy Deposit Scheme, that doesn’t mean all of them do, so it’s worth checking.

If a landlord doesn’t use a Tenancy Deposit Scheme and is obliged to, they are breaking the law. You can apply to your local County Court to get your money back. There are legal fees to pay, but you’ll get this back from your landlord if the court finds they haven’t properly protected your deposit.

You could get a payout of 1-3 times the value of your initial deposit. 

When does your landlord not need to use the Tenancy Deposit Scheme?

There are very few occasions when a landlord doesn’t have to be part of a Tenancy Deposit Scheme.

If the rent is more than £100,000 a year, the property is a holiday let, the tenant is a company rather than an individual, or if the property is owned by a university or college and rented to its students.

If a landlord has entered into an Assured Shorthold Tenancy agreement (that’s most tenancy agreements) since 6th April 2007, they have to use the Tenancy Deposit Scheme by law. 

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