Tenant Deposit Scheme Rule Change Update
On Wednesday 21st March, I wrote a piece explaining the changes to the tenancy deposit protection scheme rules in England and Wales. The new rules came into effect on April 6th, 2012.
However, it is clear from a blog piece I wrote for “The Guardian” that a lot of the “experts” out there in blogland still misunderstand the rules and what a landlord can and cannot do.
Checking the rules of the “MyDeposits” tenancy deposit scheme – one of the three schemes that operate in England and Wales – it is clear that private landlords operating on their own and using this scheme do not need to put the deposit in a ring fenced client account.
However they must:
– keep the money in a UK bank account as a minimum
– if they are a member of an approved or trade body, they must hold the deposit is accordance with their trade body scheme rules on accounting requirements.
– own the property (jointly is fine) for the deposit they wish to register
– be named as the landlord on the assured shorthold tenancy and ensure the tenancy agreement matches the deposit certificate.
For agents and corporate landlords, a ring fenced client account is required.
Landlords and Deposits
In the two “insurance based schemes” of which MyDeposits is one of, landlords do not have to actually hand over the deposit unless and until such time as a dispute arises over the return of the deposit.
And during the time a landlord holds the deposit in their account, they are entitled to earn interest on it. For the avoidance of doubt it is good practice to make this fact clear on the tenancy agreement.
My original blog from March explaining the scheme rule changes and why having a thorough inventory is key is here: http://www.lettingfocus.com/blogs/index.php/2012/03/changes-to-tenancy-deposit-scheme-rules/
The full set of rules, if you need them chapter and verse, can be found at www.TDS.gb.com. (Hover over the Landlords tab, select Documents & Forms, then “Landlords Membership Rules”).
Landlords, Deposits and “LHA Lets”
The lack of a deposit is one of the many reasons why landlords shy away from “LHA lets” because many tenants in this part of the market will not have access to a deposit, perhaps just a guarantor at best.
Even where a local authority deposit / bond / guarantor scheme exists to help “oil the wheels”, the fact is that because no money is paid over to the landlord at the outset of the tenancy, the position is still worse than in a non-LHA let.
Many landlords operating in the LHA market also tell us that claiming on a local authority deposit or bond scheme is painful, cumbersome and slow. If you have had a similar or a different experience please let us know.
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