What is the Tenancy Deposit Scheme?
The Tenancy Deposit Scheme (TDS) is run by The Dispute Service Ltd. It is an insurance-backed tenancy deposit protection scheme authorised by the government.
Tenancy Deposit Scheme has two main roles:
- To protect deposits.
- To help resolve disputes about deposits.
What is tenancy deposit protection?
Tenancy deposit protection applies to all deposits for assured shorthold tenancies that started in England or Wales on or after 6 April 2007. By law, a landlord or agent who receives a deposit for such a tenancy must protect the deposit.
Tenancy deposit protection means:
- protecting a tenant’s deposit with a government-authorised scheme such as the Tenancy Deposit Scheme;
- providing the tenant with prescribed information about where their deposit is being protected and how it will be managed.
Tenancy deposit protection schemes can be one of two kinds:
- Custodial – this is where the scheme itself holds the deposit during the tenancy.
- Insurance backed – this is where the landlord or agent holds the deposit during the tenancy, but must give it to the scheme at the end of the tenancy if there is a dispute. The scheme is insured because this guarantees that tenants will always get back the money to which they are entitled. The Tenancy Deposit Scheme is an insurance-backed scheme.
Each tenancy deposit scheme has its own rules setting out in detail how it operates. The Tenancy Deposit Scheme Rules are available from the Tenancy Deposit Scheme website and on request.
What are the legal requirements?
These are contained in sections 212–215 of, and Schedule 10 to, the Housing Act 2004 (as amended). Tenancy deposit protection applies to money received by a landlord or agent that is meant to be held as security in case a tenant does not comply with their obligations.
The landlord or agent must comply with the initial requirements of an authorised tenancy deposit protection scheme within 30 days of receiving the deposit. To protect a deposit with the Tenancy Deposit Scheme, the landlord or agent needs to belong to the scheme, register the deposit on the Tenancy Deposit Scheme tenancy database, and pay a membership subscription or deposit protection charge.
A Tenancy Deposit Scheme member (landlord or agent) must also give the tenant ‘prescribed information’. This information is set out in the Housing (Tenancy Deposits (Prescribed Information) Order 2007. It must also be given to anyone who paid the deposit on the tenant’s behalf.
The prescribed information includes the contact details of the landlord and tenant, the rented property’s address, the deposit amount and a leaflet on the Tenancy Deposit Scheme.
Is my deposit protected?
Tenants can check if their deposit is registered with the Tenancy Deposit Scheme by visiting www.tds.gb.com. If tenants have received a Tenancy Deposit Protection Certificate, they should enter the code number from that certificate. Alternatively they can enter their surname, the deposit amount, the tenancy postcode, and the date their tenancy started.
What happens to the deposit at the end of the tenancy?
If there is no dispute about the return of the deposit at the end of the tenancy, the landlord or agent must pay the deposit to the tenant without delay, less any deductions that the tenant has agreed.
If there is a dispute about the return of the deposit or about proposed deductions, the parties should try to reach agreement without delay. Most disputes are resolved informally in this way. But if the deposit has not been returned to the tenant within 10 days of the tenant asking for it, any of the parties can ask the Tenancy Deposit Scheme to resolve the dispute.
If there is a dispute, what happens to the deposit?
The landlord or agent can make a payment from the deposit if:
- both landlord and tenant have agreed; or
- the court has ordered the deposit to be paid; or
- The Tenancy Deposit Scheme directs them to send the money to the Tenancy Deposit Scheme.
Once TDS has been asked to resolve a deposit dispute, the landlord or the agent must send the disputed amount to the Tenancy Deposit Scheme. By this time, the landlord or agent should have paid the tenant any part of the deposit that is not an agreed deduction or in dispute.
How are disputes resolved?
The person who wishes to send the dispute to the Tenancy Deposit Scheme can do this online or by completing a Dispute Application Form giving details of the dispute, and any relevant supporting documents.
The deposit holder must then send the disputed amount to the Tenancy Deposit Scheme. It will copy the dispute details to the other parties and give them 10 working days to consent to the Tenancy Deposit Scheme resolving the dispute, respond to the claim, and send in their evidence.
If all the parties agree to the Tenancy Deposit Scheme resolving the dispute, the Tenancy Deposit Scheme will appoint an impartial adjudicator to make a binding decision, normally within 28 days of receiving the parties’ consent to resolving the dispute. If landlords and agents do not reply, they are treated as consenting. In all these cases, the adjudicator will normally make a decision within 28 days after the deadline for giving evidence.
Within a further 10 days of the adjudicator’s decision, the Tenancy Deposit Scheme will pay the amount due to each party.
The adjudicator’s decision will be based only on the evidence sent to the Tenancy Deposit Scheme – there will be no hearing or visit to the property.
The adjudicator’s decision is final. There is no right of appeal to the Tenancy Deposit Scheme or to the government department in charge of the tenancy deposit protection schemes.
For more information on the Tenancy Deposit Schemescheme please visit their website at www. tds.gb.com