deposit protection
34 Guide to buy to let
protection
money
A number of formAl schemes now protect both
tenAnt And lAndlord in the event of disputes.
lAwrence GreenberG reports
t
enancy deposit protection
became mandatory for
landlords in April 2007 � with
some heavy penalties for
non-compliance. the three professional
bodies with responsibilities in the private
rented sector had backed the start-up of
the tenancy deposit scheme as far back
as 2004, and welcomed its long-awaited
introduction.
in April 2007, three Government-
authorised schemes started up. they were
the existing tenancy deposit scheme
(with a core membership of regulated
letting agents) and tenancy deposit
solutions (now trading as mydeposits.
co.uk), set up by the national landlords
Association (nlA) and hamilton fraser
insurance brokers. for landlords who are
not members of either of these schemes,
there is the custodial scheme, the deposit
protection service (see box, bottom right).
serve to protect
tenancy deposit protection serves two
purposes. it safeguards the tenants'
deposit and it provides for dispute
resolution at the end of the tenancy if
landlord and tenant cannot agree.
it is this second point that is most
important. obviously if an Association
of residential letting Agents or other
regulated agent is used, under the rules
of membership, tenants money, deposit
and rent is covered by a bonding scheme.
however, as the saying goes, there is
nowt so queer as folk. disputes can arise
at the end of the tenancy, and tenant
and landlord fail to agree over damage,
dilapidation, cleaning, or even the
number of teaspoons.
with the tenancy deposit scheme, it is
then that Alternative dispute resolution,
Adr, kicks in. All the papers and the
details of the tenancy and, too, that part
of the money that is in dispute is all
sent to the independent case examiner.
they will then appoint a specially
trained, experienced and independent
adjudicator to determine a reasonable
allocation of the disputed deposit in the
circumstances.
Alternative assets
tds is financed by the subscriptions of
its member landlords and agents. there
is no extra cost for Adr under tds, or
indeed for the similar dispute resolution
services of the other two schemes.
the advantages of Adr are self-evident.
disputes are settled impartially without
having the wait or the cost of going to
court. And tenancy deposit protection is
also appealing to letting agents. they no
longer have to spend hours trying to get
landlords and tenants to talk and to agree
what is due to one another.
Compulsory purchase
buy to let landlords must remember that
tenancy deposit protection through one
of the three Government-authorised
schemes is mandatory. failure to comply
with this legal requirement whenever a
deposit is taken for an Assured shorthold
tenancy carries severe penalties when
put to the courts. the equivalent of three
months rent must be paid to the tenant
who has not been covered, and there is
no vacant possession until everything has
been put right.
it is not nearly as arduous as it
sounds. Your regulated letting agent
registered with the tds will join their
landlords to the tenancy deposit scheme
automatically. failing that, the national
landlords Association can help, or
you could transfer the deposit to the
custodial scheme.
Lawrence Greenberg is chief executive of
the Tenancy Deposit Scheme.

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