Tenancy Deposit Scheme. Keep Yourself Protected

With more and more legislation being brought in by the government landlords have to be savvier with their property investment.

Currently you must place your tenant’s money into a government backed deposit scheme (MyDeposits, Deposit Protection Service and Tenancy Deposit Scheme) within 30 days of receiving the deposit.

Right now there are two types of protection, an insured scheme and custodial scheme. The insured scheme lets landlords retain the tenant deposit during the tenancy period but landlords must pay a protection fee to the scheme. The custodial scheme will let you hand over the deposit for free during the tenancy period, the scheme earns its money through the interest earned in the deposit pool.

Top Tips for Getting Deposit Protection Right

Research from Residential Landlords Association (RLA) has shown that even being mandatory since 2007, up to 300,000 landlords are running the risk of being heavily fined for not protecting their tenant’s deposit.

RLA released some tips to help you get deposit protection right.

  • If you allow your new tenant to pay the deposit in instalments you will need to protect the money 30 days from receiving it.
  • If you use a managing agent make sure you ask for a copy of the deposit protection certificate as you will be liable for any mistakes.
  • If you use the custodial scheme you must include a stipulation about what will happen to any interest generated at the end of tenancy.
  • Make sure you include in the tenancy agreement what the deposit will be used for e.g. damage to property, etc.
  • You must also inform the tenant(s) of the details of the scheme they’re being enrolled into within 30 days – get a signature of acknowledgment in case of any disputes.

 

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