Law guide: Landlords

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Registering the deposit

Registering the deposit

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This section covers how to register the tenant's deposit at the start of the tenancy. For returning the deposit at the end of the tenancy (including what to do if there's a dispute), see Returning the tenancy deposit.

Most landlords ask for a deposit before the tenant moves into the property. The deposit is security against the tenant leaving the property owing rent or unpaid household bills, or against any damage you think is the tenant's responsibility. The terms of the tenancy agreement should set out clearly the circumstances in which you can keep some or all of the deposit at the end of the tenancy.

A deposit is typically 1 month or 2 months' rent, but you're free to negotiate the amount of the deposit with the tenant.

Be aware that in England & Wales a deposit of more than 2 months' rent could be regarded as a premium. If a premium is charged for an AST and the tenancy agreement does not state that the tenant must get the landlord's consent to assign or sublet, the tenant can do so without consent. Most tenancy agreements will state that the tenant can't assign or sublet without consent, and the tenant will then be required to get consent whether the deposit is a premium or not. A tenant assigns the tenancy when he charges someone to take it over as the tenant. The tenant sublets if he remains the tenant and then lets the property out to a sub-tenant.

You must:

  • Register the deposit with an authorised scheme and keep it protected throughout the tenancy.
  • Give the tenant (and anyone who has paid the deposit for them, such as an employer) certain required information about the scheme you have registered the deposit with – see Prescribed information.

If you don't register the deposit or give the tenant the prescribed information

In England, Wales and Scotland, if you don't register the tenant's deposit in an authorised scheme or give the tenant the prescribed information within the required time, the court could require you to pay an amount of up to 3 times the deposit to the tenant in addition to repaying the deposit to the tenant or paying it into an authorised scheme.

In Northern Ireland, the local council could require you to pay up to 3 times the amount of the deposit or might start a court action for this, which could result in a fine of up to £20,000.

Tenancy deposit schemes

Tenancy deposit schemes are in place across the UK. The schemes you can use will depend on where the property is located.

There are 2 types of tenancy deposit scheme:

  • Custodial schemes
  • Insurance-based schemes

The main difference between them is who holds the deposit throughout the tenancy.

Custodial schemes

Custodial schemes are free of charge; they're funded from the interest earned on deposits held. With a custodial scheme:

  • You (or your agent) pay the tenant's deposit into the scheme
  • The scheme provider (and not the landlord) holds the deposit

Insurance-based schemes

Insurance-based schemes charge a fee; they provide cover against the landlord failing to return the amount owed to the tenant at the end of the tenancy. With an insurance-based scheme:

  • You (or your agent) hold the deposit (in a separate bank account where possible)
  • You register the deposit with the scheme (so that it's insured under the scheme)

Scheme providers and when to register the deposit

Scheme providers, and when you must register the deposit after receiving it, depend on where the property is located.

England & Wales

You (or your agent) must register the deposit and give the tenant the required information within 30 calendar days.

In England and Wales, there are 3 custodial schemes: mydeposits, the Tenancy Deposit Scheme and the Deposit Protection Service.

  • The insurance-based scheme providers are:

mydeposits

Tenancy Deposit Scheme

Deposit Protection Service

Scotland

You (or your agent) must register the deposit and give the tenant the required information within 30 working days.

In Scotland there are only custodial schemes. The approved scheme providers are:

SafeDeposits Scotland

mydeposits Scotland

Letting Protection Service Scotland

Northern Ireland

You (or your agent) must register the deposit within 14 calendar days, and give the tenant the required information within 28 calendar days.

  • The custodial scheme providers are:

Tenancy Deposit Scheme Northern Ireland

mydeposits Northern Ireland

Letting Protection Service Northern Ireland

  • The insurance-based scheme providers are:

Tenancy Deposit Scheme Northern Ireland and mydeposits Northern Ireland

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