A deposit is money paid to a landlord or Agent in consideration of entering into a legally binding contract known as a ‘tenancy’. A deposit is not treated as an advance payment of rent. It is held to give some protection to a landlord from any breaches of the tenancy that may give rise to a financial loss suffered by the landlord. As a general rule of thumb, landlords often seek a higher deposit from those tenants who are considered to be a higher risk.
Your landlord must protect your deposit in a government backed tenancy deposit protection scheme if you rent your home after 6 April 2007. This applies to all Assured Shorthold Tenancies. Most private tenancies will be Assured Shorthold.
In England and Wales your deposit can be registered with:
Your landlord or letting agent must protect your deposit within 30 days of receiving it.
Your Landlord must provide you with prescribed information in writing, as required under The Housing (Tenancy Deposits) (Prescribed Information) Order 2007.
Once your landlord has received your deposit, they have 30 days to tell you:
Contact the TDS if you are not sure whether your deposit has been protected.
Your landlord does not have to protect a holding deposit (money you pay to ‘hold’ a property before an agreement is signed). Once you become a tenant, the holding deposit becomes a deposit, which they must protect. Your landlord must use a TDS even if your deposit is paid by someone else, for example, your parents.
The TDS makes sure you will get your deposit back if you:
Your landlord must return your deposit within 10 days of you both agreeing how much you will get back.
If there is a dispute with your landlord, then your deposit will be protected in the TDS until the issue is resolved. The TDS offers a free dispute resolution service if you disagree with your landlord about how much deposit should be returned. You do not have to use the service but if you do, both you and the landlord have to agree to it. You will both be asked to provide evidence and the decision made about your deposit will be final. The TDS will refund your deposit if the dispute resolution service agrees. There is likely to be a strict time limit to raise a dispute, so you should contact the TDS as soon as possible.
You can ‘raise a dispute’ to get your deposit back if you cannot contact your landlord and your deposit is held by one of the approved TDS.
You can apply to your local county court if you think your landlord has not used a TDS when they should have.
If the court holds that your landlord has not protected your deposit, it can order the person holding the deposit to either:
The court can also order the landlord to pay you up to three times the amount of deposit paid.
The court can prevent your landlord evicting you when the tenancy ends if your landlord has not used a TDS to protect your deposit. The landlord must give you notice (a ‘Section 21’ notice) if they intend to evict you. This notice will be invalid if your deposit has not been protected.
If the landlord tries to evict you before your tenancy ends, because they feel you have caused them financial loss (such as rent arrears), the landlord must give you notice (a ‘Section 8 notice’). If the landlord has not protected your deposit before giving you such a notice then you can make a counterclaim against them for the failure to register your deposit.
A tenant should not have to pay any additional deposit, whether during the fixed term of the tenancy or after the fixed term has expired. If any additional deposit has been paid by the tenant then it must be protected in the same way as the original deposit. Any deposit that has been previously paid by the tenants must be included to the additional amount paid.
A landlord can issue a separate claim to recover any additional losses that are suffered over and above the deposit paid. If the losses are due to rent arrears, the landlord can claim the arrears as part of any Section 8 possession proceedings.
You should seek further legal advice if your landlord threatens to evict you.
For more information please contact our Housing Team on 020 8492 2290 or attend our free advice clinic that is held at our offices every Monday between 2:00-4.30pm.