Types of Deposit Protection Scheme

In accordance with the newest laws involved with lettings and rental agreements landlords and letting brokers are actually required by legislation to guard deposits over the period of a tenancy. The change in laws solely impacts ASTs (Assured Shorthold Tenancies) though as these are the predominant type of tenancy within the UK most landlords should now use a deposit safety scheme.

The laws was created for 2 essential causes, firstly to extend transparency inside rental agreements in relation to the holding of deposits and secondly to keep away from tenancy disputes from going to courtroom by providing an alternate dispute decision service to each tenants and landlords. Inside the UK there are solely 2 forms of deposit safety scheme obtainable to be used, these are custodial and insurance coverage primarily based.

How the Custodial Deposit Safety Scheme Works:

On the graduation of the tenancy the tenant pays their letting agent of landlord the deposit sum. At this level the owner then has 14 days through which to pay the deposit into the deposit safety scheme and inform the tenant that it has been protected in addition to any particulars of the scheme getting used.

All through the tenancy the deposit is held within the custodial scheme’s checking account, the place any curiosity accrued will probably be paid to the tenant if they’re entitled to it. On the fruits of the rental interval the owner and tenant will usually agree a sum to be returned, usually the complete deposit though the owner could want to withhold a specific amount to pay for injury that occurred in the course of the tenancy.

If both get together dispute the quantity it’s taken to the choice dispute decision service that may weigh up the components of the case and determine a good quantity to be returned. The service’s judgement can nonetheless be disputed additional and brought to courtroom though that is an costly route.

How the Insurance coverage-based Deposit Safety Scheme Works:

This scheme works in the identical manner because the custodial deposit safety scheme though the distinction is that the owner pays an insurance coverage premium to insure the worth of the deposit. The insurance coverage ensures that if the owner refuses to stick to the insurance coverage coverage then the insurance coverage can return it to the tenant. With insurance coverage primarily based schemes disputes are dealt with in the identical manner.

The deposit safety scheme has been launched to offer additional readability for these utilizing ASTs and to additionally make the dispute course of extra simple, cheaper and fewer time consuming for all concerned.