Guide to the Deposit Protection Scheme

Tenants and landlords alike should be aware of the Deposit Protection Scheme, introduced by the government to make agreements concerning deposits fairer.

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Tenancy Deposit Protection requires landlords to place their tenants’ deposits into a tenancy deposit scheme, which protects the deposit until the tenancy comes to an end. This guide explains in more detail what is expected of both landlords and tenants in relation to the scheme.

A deposit, usually the equivalent of one month’s rent, is paid at the beginning of a tenancy. It’s there to cover excesses such as damage, cleaning costs and unpaid bills. Landlords must place the deposit with a government-approved deposit protection scheme.

Types of deposit protection scheme

Scheme rules vary depending on which part of the UK the accommodation is in, but in general, there are two types of deposit protection: custodial and insurance. With custodial schemes, the deposit is lodged until the end of the tenancy. Once the landlord and tenant have agreed how much of the deposit is to be withheld to cover damage and other costs, the remainder is then released to the tenant. Insurance schemes are different in the sense that the landlord pays a fee for the protection; the insurer will pay the tenant if the landlord fails to pay, with the insurer then attempting to recoup the amount from the landlord.

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Inventories and deposit schemes

It may come as a surprise, but inventories are not a formal part of deposit protection schemes. However, it makes sense for both parties to have a record of the contents and general state of the accommodation at the start of a tenancy. This provides a measuring stick by which tenant and landlord can agree the cost of repairs and therefore how much of the deposit is refundable when the tenancy concludes. To do this effectively, a property inventory software app from providers such as https://inventorybase.co.uk/ is often used by landlords to record inventories, take photos and even sign contracts between landlords and tenants on site. In the event of a dispute between a landlord and tenant, deposit protection schemes offer a dispute resolution service.

Tenants can take landlords to court if they believe a landlord has failed to lodge their deposit into a deposit protection scheme. It is important that both parties familiarise themselves with deposit protection schemes before the tenancy commences.