Property management: where should I keep a tenant’s deposit?

As a private landlord, you have a legal obligation to keep your tenant’s deposit in a tenancy deposit protection (TDP) scheme.

This needs to be done within a 30 day period following the beginning of a new tenancy, as if you don’t you could face a number of issues.

To help make this clearer for you, especially if you’re new to the Private Rented Sector, below you’ll find details on what a tenant’s deposit is and where you need to keep one.

Tenant deposits explained

To start with the basics, before a tenancy begins you can request an amount of money (the deposit) to cover any potential damage caused by your tenants, or to cover any rent they can’t or don’t pay – which you outline in the tenancy agreement. The amount is typically the same as one month of rent, although it can be more and although a deposit isn’t legally required, it’s certainly a sensible option given the possibility of such issues.

The TDP scheme

The TDP scheme was first introduced with the Housing Act 2004 with the simple premise of helping to make sure that all deposits were managed fairly. This applies to returning the deposit to a tenant who has met the terms of their rental agreement and equally, giving a landlord justification to use part of the deposit if they haven’t.

Where do you keep the deposit?

If you take a deposit and you’re letting a property on an assured shorthold tenancy that started after the 6th April 2007 you’re now required to keep the money in a TDP scheme, as stated by official Government legislations. These rules list the following three options for England and Wales:

There are two separate options for Scotland and Northern Ireland:

What if I don’t use a TDP scheme?

As mentioned above, you have 30 days in which to put the deposit into one of these schemes. If you don’t Government rules state that you could have to:

  • repay the amount to your tenants
  • pay the amount into a custodial scheme
  • repay up to three times the deposit amount back to tenants within 14 days

How to make this process easier

Even if you use a letting agent, putting the deposit in one of these schemes is your responsibility. While you can find guidance from each option, if you choose MyDeposit there’s a great way to make this process quicker and easier and that’s by using the Rentr property management app.

This innovative app comes with a number of features to help you let your private properties independently and one such feature can help with your deposit management. You can store your MyDeposits certificate number on your smartphone or tablet via the app for easy reference, rather than having to keep hold of lots of physical records. So be sure to consider this, and the useful information above, to make your property management much quicker and easier.

By | 2017-03-13T09:35:13+00:00 October 27th, 2015|Deposits, Landlord, News, Responsibilties|0 Comments

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