New protection for tenancy deposits
30th March 2007
Alan Whitehead is urging people in Southampton who are about to move into rented accommodation to be aware of a new government scheme that will keep their deposits safe.
Tenancy Deposit Protection will come into effect from April 6th 2007. The scheme means that a third party will either hold on to or protect any new deposit a tenant pays to their landlord. If a landlord refuses to pay back part of the deposit because of something the tenant believe is unfair, the tenant can go to the third party and make their case for getting it all back.
Research conducted by Dr Whitehead in 2004 showed that about half of the people who live in rented accommodation in Southampton had experienced problems in getting their deposits back.
Problems encountered by tenants included:
- A landlord giving deposits back in the form of cheques which then bounced
- Excessive charges being made for cleaning
- Landlords being slow to return deposits
In welcoming the introduction of the scheme, Dr Whitehead said:
“This scheme will benefit both tenants and landlords. Good tenants will know their deposits will be returned, and good landlords will know they will be able to claim fair compensation for any damage. If you are planning on moving soon, if you are a student going away to university this autumn for example, I strongly encourage you to make sure your new landlord complies with the scheme.”
Yvette Cooper, Minister for Housing and Planning said:
“It is outrageous that tenants are being ripped off by unscrupulous landlords who treat deposits like an extra month’s rent. That’s why we have introduced this important scheme, which will strengthen the rights of private renters in Southampton and across the country.”
Adam Sampson, Chief Executive of Shelter, said “Shelter helps thousands of people each year with deposit problems and has campaigned for many years to get deposit protection introduced, so we are delighted to see the new Government scheme being rolled out, making the private rented sector fairer for everyone.”
More information
- More information can be found on the Communities and Local Government website can be found at www.communities.gov.uk/tenancydeposit
- Dr Whitehead surveyed areas with a high concentration of HMOs in 2004, asking about problems renters had experienced in getting their deposits back. Approximately 50% of respondents had experienced problems getting their deposits back, and over 90% of respondents supported the introduction of a tenancy deposit scheme.
- 1.7 million people lived in the private rental sector under Assured Shorthold Tenancy (AST) agreements (Housing in England 2004/5 CLG, 2006). The average deposit in England for AST agreements is £700 (CLG Government figures). Using these figures, Shelter estimates that more than £1 billion in deposit money is currently being held by landlords.
- In 2005/6 there were 2.5 million privately renting households, nearly 12% of all households.
- In 2004/5 almost 30 per cent of deposits (held by landlords) were returned only in part or not at all. 77 per cent of tenants who did not get all of their deposit back felt that it was not justified for their landlord to withheld the amount of money they did (Housing in England 2004/05, DCLG, 2006)
- Tenancy Deposit Protection (TDP) schemes will take two different forms. Single custodial schemes will involve money being paid into and held in a separate account. For insurance-based schemes, the landlord will retain the deposit, but any failure to repay the deposit to the tenant would be covered by the scheme's insurance arrangements. In both cases there will be an Alternative Dispute Resolution service to provide an alternative to the courts.
Tenancy Deposit Scheme – what it will mean for you:
- Anyone signing a tenancy agreement after April 6th should check with his or her landlord or agent how their deposit will be protected.
- The landlord has 14 days to tell you details of the scheme so you can check your money is protected. If your landlord or agent has not given you details you can contact the Tenancy Deposit protection helpline yourself to check the situation.
- There are sanctions against landlords who don’t comply with the law. You could take your landlord to court and if your landlord has not given you details of the scheme or has not put the deposit in an authorised scheme, the court will order the landlord to repay the deposit or pay it into a scheme. The court must also order the landlord to pay the tenant a fine of three times the deposit within 14 days. However, you may decide not to pursue this course of action until you are ready to leave.
- In addition, landlords who haven’t put the deposit in a scheme will not be allowed to use the ‘notice only’ ground to get an order for possession of their property. So if you are given notice to quit by your landlord, it’s very important to check immediately that your deposit is protected; if it’s not you should get advice as you may have a defence against eviction.
- If you move out of your home and your deposit has not been safeguarded in a scheme and your landlord won’t repay it, then you won’t benefit from the new protection. Your only course of action would be to take the landlord to court and try and get your deposit back. That’s why it is so important to check your position before that happens.
