An Overview of the Various Deposit Protection Service and Schemes. Since 2007 the legislations regarding the protection of deposits has demanded that any landlord who accepts a deposit for an assured shorthold tenancy must protect it within 14 days of receipt. Landlords can do this by using one of three approved deposit protection schemes available in the UK.
The reason that the Deposit Protection Service, MyDeposits and the Tenancy Deposit Scheme have all been tasked to protect deposits is to ensure that all deposits are paid, held and returned in a fair way. With millions of pounds being paid as deposits over the space of a year, the legislation now offers all parties involved protection from unscrupulous operators.
The creation of these schemes has provided a range of benefits to both landlords and tenants. It can be seen as a significant improvement in tenant rights and specifically provides tenants that may lack the financial apparatus to pursue legal actions with a clearly defined process of retrieving deposits from unscrupulous landlords. On the other hand, the legislation ensures that if there is a legitimate reason to withhold a deposit, they have the rights and protection to follow through the repayment refusal.
The different schemes, the Deposit Protection Service, MyDeposits, and the Tenancy Deposit Scheme differ in fundamental ways. Firstly the Deposit Protection Service is regarded as a ‘custodial’ scheme in that landlords must pay the deposit into an independent bank account for the duration of the tenancy. The other two schemes are insurance based meaning that landlords must obtain an insurance policy to protect the deposit, although the physical deposit can remain in their account.
All the schemes will only repay the deposit after both parties can settle on a particular sum. This sum will normally be calculated in accordance with the original inventory and as long as the tenant leaves the property in the same state as they found it (allowing for fair wear and tear) then the deposit should be repaid in full. If a dispute does arise however, either party can utilise one of the independent deposit resolution services attached to the schemes.
Ultimately the Deposit Protection Service, MyDeposits and the Tenancy Deposit Scheme have given both tenants and landlords a clearer position when it comes to deposits, helping both parties to resolve disputes without the expense of time consuming civil court proceedings.