Tessa’s Ten Top Tips on Tenancy Deposits
- Where the deposit is for an assured, assured shorthold tenancy or residential license – no more than five weeks worth of rent can be taken as a deposit, or six weeks if the tenancy has an annual rent of over £50,000 pa. Any excess will be a ‘prohibited payment’ under the Tenant Fees Act and penalties will apply. Note that this limit does not apply in Wales.
- All deposit money paid to landlords in respect of Assured Shorthold Tenancies (assured tenancies after the commencement of the Renters Rights Act) or Welsh Occupation Contracts MUST be protected in a government-authorised tenancy deposit scheme.
- Landlords must also serve prescribed information on tenants/contract holders as well as protect the money in a scheme – the service of the prescribed information is as important as actually protecting the money in a scheme and there are similar penalties for default. The prescribed information must be given to the tenant/contract holder within 30 days of the landlord receiving the deposit.
- Deposits paid in respect of other occupation types, such as company or other common law tenancies or by residential licensees or lodgers, do not currently need to be registered in a scheme.
- Remember that the deposit money belongs to the tenants/contract holders. For this reason, it is essential that there is a clause in your agreement authorising you to make deductions. The lack of this is a common reason why landlords fail at adjudication.
- If the deposit has not been protected in a scheme AND/OR if the prescribed information has not been served, tenants/contract holders can apply to the County Court for a penalty payment to be awarded of between 1 and 3 times the deposit sum.
- Failure to protect the deposit money (for an AST/AT or Occupation Contract) will mean you will have problems obtaining a possession order. Unless either you have repaid the deposit money to the tenants/contract holders or they have brought a claim for the penalty, which has been resolved by court order or by settlement.
- It is important that you have a really detailed inventory / schedule of condition showing all the items in the property and their condition. Otherwise, you will find it hard to prove that any damage was done by tenants/contract holders if making a claim at adjudication. Ideally, the inventory should also include details of the property condition – such as walls, doors and windows etc, and whether the property is clean.
- Keep all receipts and invoices for work done and replacement items purchased for the property after damage done by tenants/contract holders if you want to make a claim. However, be aware that you cannot claim for damage which can be classed as ‘fair wear and tear’.
- If there is any dispute with the tenant/contract holder regarding deductions from the deposit, make sure you comply with the requirements of your tenancy deposit protection scheme within any time limits they may have set. Be sure to provide all details to prove your claim, and don’t expect the adjudicator to be a mind reader! If you don’t tell him something, he will not take it into account when considering your case.
Further Resources
- Make sure (in England) that you always take the correct deposit amount by using our handy calculator (which you can instal on your own website)
- We have detailed guidance on Creating an Inventory (with a draft form) and on Tenancy Deposit Prescribed Information
- See what else we have on the index page here or the Wales page here
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