Landlords are obligated by law to put tenants deposits into a protection scheme if their property is let out under an assured short hold tenancy agreement after April 2007. The deposit rules and regulations can be very confusing so here are the best schemes for each landlord in England and Wales? With that in mind we have outlined some details on deposits and the different schemes.
What is a Tenancy Deposit?
Landlords are entitled to request a deposit to cover unforeseen cost such as damages to the property or unpaid rent. Landlords don’t have to take a deposit but it is very much advised. As landlords aren’t obligated to take a deposit there is no set amount that you have to take as a deposit. It is typical to take the equivalent to one months rent. However it’s also not uncommon to ask for as much as 6 weeks rent.
More about the Tenancy Deposit Scheme
It’s important to note that it is solely a landlord’s responsibility to make sure that you have a tenancy deposit in place and even if you do have a letting agent. There are two different type of schemes an insurance based scheme and a custodial scheme.
Where a scheme is insurance-based, tenants pay their deposit to the landlord, who retains the money but pays a premium to their insurer. This is where a tenant pays their deposit to the landlord who retains the money and then pays a premium to their landlord insurer.
Custodial schemes are favoured by the majority of landlords this is where the tenant pays their deposit to the landlord or his agent, who then pays it directly into the scheme. Custodial schemes are more popular with the majority of landlords. The tenant pays their deposit again to the landlord and the landlord then places it into a scheme. There are a number of paid schemes however here is a link to a government back free scheme.