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tenancy deposit scheme(Eng)

A scheme that is set up for the purpose of safeguarding a tenancy deposit paid in connection with an assured shorthold tenancy (AST) and facilitating the resolution of disputes arising in connection with such deposits (Housing Act 2004, ss. 212–5, Sch. 10, as amended). In England and Wales, with effect from 4 April 2007, any landlord or agent who takes a deposit (for rent up to £25,000) under an AST must protect that deposit using a government-authorised tenancy protection deposit scheme. Such a scheme may take the form of either (a) a "custodial scheme" or (b) an "insurance scheme". The custodial scheme requires that an amount equivalent to the deposit is paid into a designated account maintained by a "scheme administrator" solely for that purpose. Under an insurance scheme the deposit may be paid to the landlord, but on the basis that the agreed amount will repaid to the tenant or, if not repaid due to a dispute, will be paid into a designated account held by the scheme administrator and the administrator is required to set up insurance against the possibility of the landlord failing to reimburse any amount due to the tenant. Amounts held in the designated account are only released to the landlord or tenant when both parties are in agreement or on the resolution of any dispute. The tenant can apply for a court order requiring the return of any deposit or its protection by one of the schemes. Failure to comply with such an order may require the payment of compensation equal to three times the value of deposit within 14 days of the order. If the deposit is not protected by one of the schemes, it is not possible for the landlord to serve notice on the tenant and obtain possession of the demised premises (HA 2004, s. 215). The scheme must also provide a facility to enable any dispute to be resolved without recourse to litigation (HA 2004, s. 212, Sch. 10).

In addition, the landlord is required to give the tenant certain prescribed information, such as the address of the property to which the tenancy applies, the amount of the deposit, contact details of the scheme administrator, the parties to the tenancy and any other relevant party, the circumstances when all or part of the deposit may be retained by the landlord by reference to the terms of the tenancy, the procedures that are applicable to the scheme, the facilities for dispute resolution, together with a certificate of authenticity of the information provided by the landlord and confirmation that the landlord has given the tenant the opportunity to sign any document containing information provided by the landlord as being accurate to the best of his knowledge and belief (The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 (SI 2007/797)

For this purpose a "deposit" is defined as "a transfer of property intended to be held (by the landlord or otherwise) as security for – (a) the performance of any obligations of the tenant, or (b) the discharge of any liability of his arising under or in connection with the tenancy", HA 2004, s. 213(8). Any such deposit can only take the form of money (HA 2004, s. 213(7)).

See also www.direct.gov.uk/en/TenancyDeposit/index.htm



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