When did the schemes come into effect?
6 April 2007.

Why should the Government protect tenants' deposits?
So that, when a tenant pays a deposit, and he or she is entitled to get all or part of it back, the tenant can be assured that this will happen.

Aren't these provisions unfair on good landlords?
No. Most landlords deal fairly with tenancy deposits and are already acting responsibly by safeguarding deposits.

However, these provisions need to be put into place to ensure that the minority of bad landlords act responsibly by safeguarding tenancy deposits.

TDP puts into place a simple process for all landlords to ensure that tenancy deposits are safeguarded, supported by a free alternative dispute resolution (ADR) service. This is in the interests of both landlords and tenants.

What sort of tenancies does deposit protection apply to?
All deposits taken by landlords in relation to assured shorthold tenancies (ASTs) - the most common form of new tenancy - in England and Wales.

Does tenancy deposit protection apply to landlords who live overseas?
Yes. If a landlord lives overseas but lets a property in England or Wales on an AST, the landlord will have to protect the tenant's deposit. Note, however, that only the custodial scheme, run by the Deposit Protection Service, takes deposits from overseas landlords. Where an overseas landlord uses an agent to hold the deposit, that agent can protect the deposit in one of the insurance-based schemes. 

The details are set out in:Who are running the schemes?
(see Scheme Members  section)

What is the average deposit for an AST?
Landlords usually require a deposit equivalent to 4-6 weeks rent so you could expect to need a deposit of between £550-£750 for a 2 bedroom property in the Braintree District.

A tenancy cannot be an AST if the rent exceeds £25,000 per annum.  Are there any plans to review this limit, as rents have increased over time?
The £25,000 upper limit is set out in schedule 1 of the Housing Act 1988. There are no proposals at present to review this limit.

Does this upper limit of £25,000 apply to the property as a whole or to each individual tenancy?  How does it work when there are joint tenants?
It is the amount payable under the individual tenancies that is relevant, and not the amount payable in respect of the property.

So if, for example, four tenants each entered into separate tenancy agreements under which they were each required to pay £8000 per year in respect of a shared house, then each of those deposits would need to be protected (assuming that the tenancy agreements were for ASTs. But if they were joint tenants, signing one tenancy agreement under which they were jointly and severally liable to pay £32,000 per year, then the tenancy cannot be an AST and therefore TDP legislation will not protect the deposit.

How does deposit protection work in practice?
There are two types of scheme: a custodial scheme and an insurance-based scheme.  

The landlord - not the tenant - has the option to choose whether to safeguard the deposit in the custodial scheme or in an insurance-based scheme. The names of the schemes, and their contact details, are set out in:

Who are running the schemes?
(see  Scheme Members section)

A landlord will have 14 days (30 days with effect from 2nd April 2012) to safeguard a deposit from the day he receives it. The landlord will have to provide the tenant with certain information about the scheme safeguarding the deposit within that period. This information has been prescribed in secondary legislation and is set out in the Prescribed Information section.

To avoid disputes having to go to the courts, each scheme is supported by an alternative dispute resolution (ADR) service - although the use of this service is not compulsory.

Where a landlord uses an agent, and the agent holds the deposit for the landlord, can the agent's address details, only, be provided to the tenant?

Yes. The person who receives and retains the deposit will need to be the person who is registered with the authorised tenancy deposit scheme. Thus, in instances where the deposit is taken and held by a letting agent, the landlord's details will not need to be included in this information.

What defines the tenant's main home and how will TDP affect it?

It is not for the Government to advise a tenant or landlord  what, under Section 1(1)(b) of the Housing Act 1988, constitutes a tenant's "only or principal home" as this will be a question of fact, depending on the tenant's particular circumstances. Where it is decided that the property is the "only or principal home", the property will be an AST. If, on the other hand, the decision is that the property is not the "only or principal home", it will not be an AST.

How can a tenant find out if his deposit has been protected?

When a tenant pays a deposit, he should ask his landlord this question: "how will my deposit be protected?" Within 14 days (30 days with effect from 2nd April 2012) of the landlord receiving the deposit from the tenant (which could be in the form of cash, cheque, money transfer, etc), the landlord must provide the tenant with the information about the scheme providing the protection. The 14 days (30 days with effect from 2nd April 2012) runs from the time the deposit is received, and not from when the funds are cleared. A tenant will be able to contact the scheme to find out if his deposit has been protected.

Are there any penalties if the deposit isn't protected as required?

If a landlord fails to protect a deposit, the courts can award a penalty of up to 3 times the amount of the deposit.

Failure to protect a deposit also affects a landlords ability to serve a section 21 ntoice to end the tenancy.

I am an agent and take a cleaning fee paid in advance, but redeemable against leaving the property in good condition. Will that constitute a deposit under the Act?

Yes. Any money taken for security in respect of a tenant's obligations or liabilities connected with the tenancy (including his liability to clear the property on vacating it) must be secured in a scheme.

I am a landlord. I won't take deposits. Instead I plan to charge the tenant extra rent each month to offset against excessive cleaning or damage. If there is no need for me to take the extra rent, I'll hand it back to the tenant. I'll set this out in the tenancy agreement. Will I need to protect the extra payments?

Yes, you will. The extra payments are clearly required by you as security against the tenant not carrying out his obligations under the lease, and so such payments must be protected in a scheme.

I won't take a deposit. Instead, I'll take two or three months rent in advance.  Will this be subject to TDP?

No. Rent paid in advance is not a deposit. However, you will have nothing to offset against damage etc. at the end of the tenancy and your tenant will stop paying his rent two or three months before the tenancy ends.

A landlord takes a 'rent deposit' to be held by him, for the duration of the tenancy, as security against the tenant's failure to pay the rent? Will this be subject to TDP?  

Yes. Many tenancy agreements provide for the deposit to cover rent arrears. A deposit paid as a 'rent deposit' is a tenancy deposit under Section 212(8) of the Housing Act 2004, and, therefore, must be protected in an authorised scheme.

A tenant is charged an administration fee for repairs or the replacement of broken items, which normally would get deducted as expenses from the tenant's deposit, but which, according to the tenancy agreement, will be repaired or replaced at the landlord's own expense. Will this be subject to TDP?

The tenant needs to establish whether the fee is paid to the landlord with an expectation that all or any of it will be refunded at the end of the tenancy. If it is, then it must be treated as a tenancy deposit and protected under a scheme. If, however, it is non-refundable, it is not a deposit.  

What happens if a landlord sells a property with a tenant in situ?  Or where a mortgage company regains possession of the property with the tenant in situ? The deposit will have been held by the original landlord.  

If the deposit has been paid into the custodial scheme, it will stay there until the end of the tenancy and, provided there is no dispute about it being repaid to you, the scheme will repay it to you. If there is a dispute, the disputed deposit amount will remain protected until the dispute is resolved. If it has been protected in an insurance-based scheme, your new landlord may not have been provided with the details, but you will still remain protected.  It would be in your interest to contact the scheme immediately you discover that your landlord is selling, or when you get the notice from the mortgage company that it intends to take possession. It is very unlikely that the mortgage company will permit you to remain in occupation once it has taken possession, but your deposit will still remain protected.  The new owner of the property will be your new landlord and so you will need to contact him if you consider you are entitled to the return of all or part of your deposit.

Many agents are let-only. How will a tenant know that, when he has paid a deposit to a let-only agent, it has actually been passed to the landlord?

It's good practice for a let-only agent to write to the tenant telling him his deposit has been passed to the landlord. In any event, the tenant must be told by either the landlord or his agent within 14 days (30 days with effect from April 2012) how the deposit is protected. Please note that, under the Housing Act 2004, the landlord is ultimately responsible for protecting the deposit.

Will the addition of interest on the deposit affect a tenant's entitlement to housing benefit?

During the period of the tenancy, the interest that accrues on the deposit will be disregarded for the purposes of housing benefit. This is because the tenant is unable to use the deposit and any interest accrued.

However, at the end of the tenancy, the position may change. When the deposit and any interest is returned, it will be treated by the benefits system as capital rather than income. Provided that the housing benefit claimant's capital remains under £16,000 then the capital will continue to be disregarded. If the deposit and the interest received raises the claimant's capital to over £16,000 then benefit will cease to be paid.

In practice, however, since it is likely that the deposit will be transferred to a new tenancy, the returned deposit plus any accrued interest may only have a minimal, if any, effect on entitlement to benefit.

Because Housing Benefit payments are paid 4 weeks in arrears, there could be a problem at the end of a tenancy, as the rent will not have been paid in full.  

Under the Housing Act 2004, the deposit must be paid to the tenant within 10 days of both parties agreeing to what should be paid back (which may not be the last day of the tenancy agreement). Or, if there is a dispute, 10 days from the date the scheme is notified of the decision of the alternative dispute resolution service. Clearly, in this case, the landlord will know that the tenant is on Housing Benefit (HB), and both landlord and tenant will know that the last month's rent may arrive after the end of tenancy. The parties should therefore be aware that as HB will not be paid until up to four weeks after the end of the tenancy agreement, the deposit will not be released to the tenant until the HB has been paid.