Safe deposit

Tenancy deposit protection is being beefed up to ensure renters do not lose out
From April 2009, only regulated letting agents and landlords will be covered by the statutory Tenancy Deposit Scheme, which is designed to ensure that tenants get back their deposit when they are entitled to it.

Typically, landlords insist on six weeks’ rent as a deposit. In the past, rogue landlords have withheld deposits at the end of a tenancy for no good reason.

Experts say detailed inventories are more necessary than ever to avoid costly disputes. Landlords and agents who fail to properly safeguard a tenant’s deposit are now required to pay tenants three times the deposit amount when the tenancy comes to an end.

There are two types of deposit protection - insurance-based schemes and “custodial” schemes. Both types provide a dispute-resolution service that is designed to be faster and cheaper than court action.

Tenancy Deposit Solutions is an example of the former. The tenant pays the deposit direct to the landlord, who pockets the money and takes out insurance. This then indemnifies the tenant if the landlord fails to return the deposit.

Deposit Protection Service is a government-approved custodial scheme. Under this scheme the landlord pays the deposit into the scheme, and the tenant is repaid at the end of the contract provided there is no dispute.

Only tenancies where the annual rent is less than £25,000 are covered by such schemes, and landlords must provide details of how deposits are being held within 14 days of taking the deposit. For more information, visit www.direct.gov.uk/en/tenancydeposit/index/htm.

Landlords are also required to provide energy proficiency and gas safety certificates when letting a property.

To avoid later disagreement, landlords should include dated photographs showing the condition of furnishings and contents when compiling inventories, urges Alan Ward, director of the Residential Landlords Association.

“The disputed condition of household items - from stained carpets to damaged paintwork to broken windows - is the main reason why landlords claim a proportion of a tenant’s deposit at the end of a tenancy. Without photographs there is no real evidence of initial condition or of any change beyond normal wear and tear.”

Agents normally arrange for professional inventory clerks to do the job, but often landlords insist the cost (typically £150) is split with tenants.

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