Residential tenancies: rent deposits

United Kingdom

From 6 April 2007 a landlord will not be able to take a deposit from a residential tenant unless it complies with the government’s new Tenancy Deposit Scheme.

There will be two different schemes:-

1. a custodial scheme where deposits are paid into and held in a separate account by a third party appointed by the government; or

2. one or more insurance based schemes where the landlord retains the deposit and only transfers it into a scheme if there is a dispute with the tenant at the end of the tenancy.

The schemes will:

  • safeguard all deposits received in connection with a shorthold tenancy after April 2007
  • apply to any money that is taken as security – even if it is not called a deposit
  • require landlords to comply with the initial requirements of a scheme within 14 days of receiving the deposit
  • require landlords to provide information about the scheme to the tenant within 14 days of receiving the deposit
  • prevent landlords from regaining possession of the property using the usual notice procedures unless the scheme has been complied with
  • provide means of alternative dispute resolution for disputes about the return of the deposit at the end of a tenancy.

Law: Housing Act 2004, sections 212-215