With the new university year well underway, students are becoming wiser to tenancy deposit schemes and their rights. The tenancy deposit scheme was introduced in April 2007 to ensure that landlords couldn't keep the deposit at the end of the tenancy without justification for doing so. The scheme applies not only student landlords, but the majority of residential landlords.
The Housing Act 2004 details the requirements that landlords are to follow should they choose to take a deposit. If a deposit is taken then the landlord is required to comply with the initial requirements of an authorised scheme within 14 days. There are three authorised schemes which landlords can pay deposits into. These are:
• Deposit Protection Service (DPS)
• Tenancy Deposit Scheme (TDS)
Landlords taking deposits from third parties still need to protect the deposit. The relationship between the tenant and the third party (such as parents of students) needs to be ascertained, as does the level of involvement the third party has in the process. For example, the scheme administrator will need to know if the third party wants the deposit returning directly to them.
Within the 14 day period of taking the deposit, landlords need to provide tenants with the following information:
• the address of the rented property and the amount of deposit paid
• the landlord's or letting agency's name and contact details
• the name and contact details of any third party that has paid the deposit
• items or services covered by the deposit
• the circumstances under which the landlord will be able to retain some or all of the deposit
• what to do if there is a dispute over how much deposit should be returned
If landlords fail to protect their tenancy in the above way, they can face harsh penalties. Firstly possession proceedings will likely be rejected from the Court on the basis that the statutory requirements of the Act have not been met. Secondly, a tenant can choose to take action against the landlord and should the Court find that the landlord has not satisfied all of the requirements as set out above, or has failed completely to protect the deposit, then the Judge may order that the deposit be paid back to the tenant within 14 days of the order. The landlord may even be liable to pay the tenant a sum of money equal to three times the amount of the original deposit.
Landlords should be aware that tenants are becoming more aware of the above and scams are taking place in which tenants are attempting to use the system to extort money out of landlords.