Deposit return schemes help protect landlords and their tenants throughout the tenancy. But how do they work exactly?
In this guide, you’ll learn how to manage the deposit return process for landlords as well as tenants, helping you to make an informed decision about your let.
Find out how your letting agent can manage deposits.
Do landlords have to use a deposit scheme?
Tenancy deposit protection (TDP) was introduced in 2007 as part of the Housing Act 2004. Under this law, the tenant must pay the deposit to a deposit protection scheme at the outset of the tenancy.
It is the responsibility of the landlord or letting agent to place the money into a suitable scheme and safely provide the tenant’s details to said scheme.
Once the money is deposited, the scheme will stipulate the circumstances in which the landlord can refuse to return part, or all of the deposit when the tenancy comes to an end.
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How should a landlord use the deposit return scheme?
1. Register the deposit
Within 30 days of receiving a deposit, landlords must register it with a government-approved scheme. Failure to do so may result in legal penalties.
2. Provide prescribed information
Tenants will then be given details of the deposit protection scheme, including how to claim the deposit back, and any other relevant terms and conditions.
3. Inventory and check-in/check-out reports
A thorough inventory check-in and check-out report should take place before and after the tenant moves in. These reports assess any damages or discrepancies which may affect how much of the deposit is returned.
How should a tenant use a deposit return scheme?
Tenants also have certain obligations when it comes to deposit return:
1. Report damages
Tenants should promptly report any damages or maintenance issues to the landlord or letting agent. Failure to report damages could lead to complications during the deposit return process.
2. Maintain the property:
Tenants are expected to maintain the property’s condition, following any agreed-upon terms specified in the tenancy agreement.
3. Attend check-out inspection:
Tenants may want to attend the check-out inspection with the landlord or letting agent. This allows both parties to address any concerns or disagreements regarding the property’s condition.
Related: How to have your deposit returned in full
What is the deposit return process?
When the tenancy agreement comes to an end, the deposit return process begins. Here’s how it typically works:
Step one: The landlord decides if the full deposit should be returned
The landlord reviews the inventory reports, considers any necessary deductions for damages or unpaid rent, and calculates the final amount to be returned to the tenant.
Step two: The deposit return is confirmed by the tenant
If the tenant agrees with the proposed deductions, they can confirm their acceptance, and the agreed-upon amount will be returned.
What happens if the tenant is unhappy with the landlord’s decision?
In case of disputes, either party can raise a dispute with the relevant deposit protection scheme.
The scheme will then act as an impartial mediator to resolve the conflict and decide how much of the deposit should be returned.
How a letting agent can manage deposits
Understanding the deposit return process is crucial for both landlords and tenants in the UK. By adhering to the guidelines provided by the government-approved deposit protection schemes, landlords can ensure a fair and transparent system, while tenants can safeguard their interests and ensure the proper return of their deposits.
Parkers’ letting agents are committed to delivering complete peace of mind for both landlord and tenants by ensuring the property is fit to rent at all times and all legal obligations are met. This takes this hassle out of renting for all involved.
