Tenant deposits
Will some landlords do away with deposits all together?

It is now compulsory for landlords to use a Tenancy Deposit Protection (TDP) scheme. The aim is to prevent landlords retaining money given in advance by tenants to cover accidental damage. But it may have an unexpected effect and landlords may start doing away with deposits all together.

All deposits will either be held by a neutral third party or covered by an official insurance scheme. The third-party scheme is free - the company makes its money through interest on the deposits. The insurance-based schemes, backed by the National Landlords Association and the Association of Residential Letting Agents, will pay out to tenants if the landlord unreasonably refuses to return the deposit, and will be used by big landlords and professional letting agents. Disputes will be settled by arbitrators rather than the courts, to keep legal costs down.

Landlords are obliged to produce evidence that the deposit is protected, or face a fine equal to three times the value of the deposit and lose their rights to evict the tenant.

Critics of TDP say the paperwork involved is complex, and disputes may take weeks to resolve before money is released for repairs. So it is little wonder that alternatives are springing up to abolish the need for deposits altogether.

New "no deposit" schemes are being set up by companies that vet tenants for landlords by taking up references, running credit checks and looking through court records for previous evictions. They are offering to reimburse landlords if tenants they have approved fail to pay the rent or leave the place dirty or damaged, so there is no need for the landlord to take a deposit at all.

This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without appropriate professional advice after a thorough examination of their particular situation. Your home may be repossessed if you do not keep up repayments on your mortgage.

Article date: 03.07