The Tenancy Deposit Scheme

The relationship between landlord and tenant is rarely put under more pressure than when the issue of deposits is discussed.  Unscrupulous landlords have left many tenants feeling deeply suspicious of the whole question of repairs and deductions.

Under pressure from Citizens Advice the government has introduced legislation which aims to solve many of these issues.  The introduction of the [tag]Tenancy Deposit Scheme[/tag] in April 2007, covering England and Wales was welcomed by many.  The main aim of the scheme is to provide clarity and security by means of having deposits held by a thirds party.  All landlords letting property under an Assured Shorthold Tenancy (AST) agreement are now required by law to register the deposit with an approved scheme.

Nick Dardalis of Steadfast Property Management, a cheltenham letting agent, points out that the vast majority of landlords have always behaved in a professional way, but sadly the few that were causing problems have a lot of answer for.  One impact of the Tenancy Deposit Scheme is that the inventory now become a much more important document.  If a landlord wants to deduct money from the deposit they need to be able to prove the condition of the damaged item at the start of the tenancy.  An inaccurate  inventory can ruin any attempt to recover money from the tenant.

The Tenancy Deposit Scheme has been in force now for 4 months, and as expected there has been no adverse impact on the Buy-to-Let sector.  There have been calls for lenders to make sure that prospective landlords are made aware of their responsibilities by including information about the TDS on mortgage offers, although as with all legislation ignorance is no excuse.

Perhaps this legislation could be seen as more reason for the professional landlord to use the services of a letting agent to handle these matters.

5 responses to “The Tenancy Deposit Scheme”

  1. As largest network of trained inventory clerks in the UK we can vouch for the need of a detailed inventory.

    We often witness situations where an inventory is poorly laid, out, thin on detail and biased towards the landlord. This leaves landlords on thin ice when trying to claim for what they believe is their right.

    For an inventory to be valid, it needs to be a structured document identifying each room, the component of each room, i.e. doors, windows, curtains, ceiling etc. their description and anything which could be claimed for at end of tenancy.

    It should be agreed and signed by both parties with any amendments and a copy held by each.

    We find that tenants take more care when they have been involved in the process of agreeing the inventory and are less likely to dispute a claim when both parties participated in its accuracy.

  2. As a landlord I find the whole process really frustrating. Has anyone explained what happens when a tenant does not pay the last month’s deposit as ransom against the deposit!
    I know they are not supposed to, but they do and I’m not allowed to deduct overdue rent from the TDS funds. Not Happy!

  3. From the tenants perspective I think its a great system. Why did it take so long to come in?
    Knowing that my deposit is safe would make me much less likely to do anything stupid like not paying my last rent payment.

  4. As a PROFESSIONAL letting agent the overall affect of the changes to deposit regulations contained in the 2004 Housing Act are that it has become more costly for us and subsequently our clients AND tenants to administer the scheme. I agree that it adds another layer of protection for the tenants but it will positively impact on maybe 10% of the tenants in the Private Rented Sector but will negatively impact on all tenants as they will be forced, somewhere along the line, to collectively cover the additional costs to agents and landlords. I believe an arbitration scheme is good news but, as usual, better consulatation would have led to an easier and less costly system being introduced.

  5. As a Landlord I am against the scheme and see no reason why I should pay the price for unscrupulous landlords. I now have to pay three memberships fees to TDS as I own one house in my name and two others with other people. If I forget to send details of the scheme to the tenant, even if I properly protect the deposit, I have to pay four times the deposit to the tenant ( over £4,000) as compensation – for what? Forgetting to send a letter. The tenants, on the other hand, can lie on their application form about their incomes, not pay the rent, trash the place and sit in the house for months whilst I try and get a court order to get them out and there is no redress at all.I have all the risk as the deposit goes nowhere towards the cost of any real damage and I have to finance the mortgage whilst the tenant gets free accomodation. Even the Local Authority tells the tenant to sit tight and wait to be rehoused.

    When is someone going to stand up for Landlords? This Government seems to think we are put on this earth to provide free subsidised accomodation for scum who are too lazy to work and support themselves. Yes, provide enforceable sanctions to deal with bad landlords but at the same time provide equal sanctions to deal with bad tenants.

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