Since the 6th April 2007, residential landlords in England and Wales who take a deposit from a tenant on the creation or renewal of an assured shorthold tenancy have to by law protect the Tenant’s deposit in one of the government-approved schemes. These schemes are either Custodial or Insurance Schemes.

Under the custodial scheme the deposit is paid to the scheme administrator i.e. Deposit Protection Service., the deposit is kept by the administrator until the tenancy ends.

With an Insurance Scheme, the landlord keeps the deposit but pays insurance premiums and administration fees to the scheme administrator. The scheme is therefore not free as the landlord incurs the cost of the insurance.

Within 14 days of the date on which a deposit is received, a landlord must comply with any initial requirements imposed by the chosen scheme and provide the tenant(s) and any person who paid the deposit on behalf of the tenant(s), information about the scheme including the name and contact details of the scheme.

If a landlord does not protect the deposit, the Landlord will be breaking the law. The landlord will be unable to regain possession of the property using notice-only grounds for possession under Section 21 of the Housing Act 1988.

The Tenant can apply to the local county court for a court order requiring the deposit to be protected, or if already protected for the name, contact details and information on the scheme, if this has not been given. The courts can order a landlord to pay up to three times the amount of the deposit to the tenant. The court can order the landlord to safeguard the deposit with a scheme provider.

NOTE: There is no law saying that a landlord has to take a deposit from a tenant. If no deposit is taken then the scheme does not affect the landlord.

If you did not know about this law and are having difficulty obtaining possession of your property and need assistance with the court process or advice, please contact G M Hewett Solicitor on +44 (0)208 539 0075 for a free quotation.

This is a general guide not a substitute for professional advice.