The Government has announced plans to overhaul the way tenancy deposits are protected in England and Wales.
If the proposals go ahead, landlords and letting agents will no longer be able to keep deposits in their own accounts under an insured tenancy deposit scheme. Instead, all qualifying deposits would have to be held in custodial schemes managed by approved tenancy deposit protection providers.
The change is aimed at giving tenants greater protection, and does not change tenants’ existing legal rights if a landlord fails to comply with the tenancy deposit protection rules.
What are the tenancy deposit protection rules?
When you rent a property, your landlord will likely ask for a deposit before you move in. Since 2007, landlords in England and Wales have generally been required to protect these deposits in a government-approved tenancy deposit scheme.
The approved schemes are:
- Deposit Protection Service (DPS)
- Tenancy Deposit Scheme (TDS)
- mydeposits.
As well as protecting the deposit, landlords must provide tenants with prescribed information explaining where the deposit is held and how the scheme works – all within 30 days of receiving it.
What is changing?
At the moment, landlords can usually choose between two types of tenancy deposit protection:
- Custodial schemes, where the deposit is held by an independent tenancy deposit protection provider
- Insured schemes, where the landlord or letting agent keeps hold of the money but pays to protect it through an approved scheme.
Under the Government’s proposals, the insured option would be removed, meaning all deposits would be held independently in custodial schemes. The change is intended to make tenancy deposits more secure and reduce the risk of fraud.
No date has yet been announced for when the changes would come into force. Until then, the current tenancy deposit protection rules continue to apply.
What doesn't change
Although the way deposits are held could change, the legal responsibilities on landlords remain largely the same.
Where the tenancy deposit protection rules apply, landlords must still:
- Protect the deposit within 30 days of receiving it
- Use a government-approved tenancy deposit protection scheme
- Provide tenants with the required prescribed information.
If a landlord fails to meet these obligations, tenants may be able to bring a tenancy deposit compensation claim. And, depending on the circumstances, a court can award compensation of between one and three times the value of the tenancy deposit. In some cases, the deposit itself may also need to be returned.
Unsure whether your deposit was protected?
If you rented a property in England or Wales and think your landlord may not have followed the tenancy deposit protection rules, it is worth checking your position.
Our Tenancy Deposit Claims Guide explains how the rules work, when you may be able to claim compensation and how to check whether your deposit was protected.
If you think you may have a claim, you can also use our eligibility checker. If you qualify and decide to proceed, we’ll ask whether you’d like to be introduced to a trusted, regulated UK law firm that can assess your circumstances and explain your options.
Join the Claim connects consumers with SRA-regulated lawyers. Visit the claim page to check your eligibility if a claim is open with one of our trusted legal partners.
