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Deposits

Q: What is a deposit?

A: A deposit is a returnable sum payable to the owner/agent.  It is normally held against any end-of-tenancy rent arrears, wilful damage and any essential cleaning. It usually covers:

The deposit cannot be used to cover reasonable wear and tear which you have paid for in your rent.

Tenancy Deposit Protection (TDP) Schemes

Since April 2007, landlords entering into new tenancy agreements are now required to place any deposit with a Government authorised scheme, which will safeguard the money and offer independent adjudication in the event of any dispute. Tenants who have kept their rented property in good condition can be confident that they will not have all or part of their deposit withheld unfairly.

This means your landlords (or agent, if undertaking those duties) must also give you information about how your deposit is being protected (normally as a clause within the Tenancy Agreement and by giving you a leaflet) at the time of entering the deal.

The landlord must pay your deposit into one of the three authorised schemes within 14 days of receiving your deposit.

There are three TDP schemes:

There is a custodial service, where the landlord sends the deposit to The Deposit Protection Service (The DPS) who hold the deposit for you. If the landlord wants to withhold any of the deposit then the tenant and the landlord need to agree the deduction and the money is returned, as agreed, to the tenant and landlord. The only way a deduction can be made without the tenant's agreement is where they are not contactable after the tenancy has ended.

The DPS is open to all landlords and letting agents and is free to use (because it is funded from the interest the scheme operator makes on the deposits they hold).

For further details and the rules of this scheme click here

The DPS tends to be used by smaller landlords.

There are two insurance based schemes. Under these arrangements the deposit continues to be held by the landlord or agent but the money is insured, so that if the correct amount is not repaid by the landlord, the scheme can repay the money to the tenant and will; recover it from the landlord. Landlords pay an insurance premium to join these schemes. If thee are no deductions, tenants can often receive their deposits back quicker under these schemes because the landlord/agent can simply pay it back (rather than waiting for the custodial scheme to refund the money).

The largest scheme (which is also used by Unipol) is run by The Dispute Service.  Unipol and The Dispute Service also run a specialist scheme for landlords who are members of the Unipol Code to enable them to protect deposits at low cost.  For further details about this scheme click here 

The other scheme Mydeposits is a partnership between the National Landlords Association and Hamilton Fraser Insurance

The existence of the alternative dispute resolution service (ADR) will also encourage tenants and landlords to have in place, from the outset, clear agreement on the condition of the property through use of inventories, and agreement on the condition of the property – thus ensuring that landlords are also protected.

More detailed information is available here

Do All Deposits have to be Protected?

TDP will apply to all assured Shorthold tenancies (ASTs) in England and Wales, where a deposit is taken. Most contracts to let a property are ASTs and a contract that is an AST will be clearly marked as one.

However, be aware that there are some restrictions on whether tenancy agreements can be ASTs, based on an annual rental limit of £100,000. This means that if the total rent for the property for a 12 month period exceeds £100,000, a Common Law tenancy is created and so the landlord/agent does not need to protect the deposit.

What if Your Landlord/Agent has Not Protected Your Deposit?

Unipol and NUS have produced a Tenancy Deposit Protection: Enforcement Pack that gives you detailed advice on how to enforce and protect your rights.

What About Joint Tenancies?

Schemes vary about how they approach joint tenancies. Some schemes favour a nominated lead tenant who then has the whole deposit for the house protected in their name. If you are agreeing to this then make sure that you trust your co-tenant to give you the money back at the end of the let. The lead tenant is also the only tenant who has access to the dispute procedure so make sure they consult you before agreeing to any deductions that will affect you.

Other schemes register each person on the tenancy and the amount they have paid separately, in which case each tenant can use the dispute procedure.

Q: What's the best way of paying a deposit?

A: Always pay your deposit by cheque or credit card (because then you can prove payment in the event of any dispute) and get a receipt, which states the amount paid. If your deposit is protected by one of the TDP schemes this should include:

Ask your landlord or agent the simple question - 'how is my deposit protected?'.

Q: How much is a deposit going to cost me?

A: This will depend on where you’re living, but reckon on it being in the region of a month’s rent (although you must not treat it as your last month’s rent when you are approaching the end of your tenancy - rent and deposits are totally separate matters. Click here to find out why not.

Q: When should I pay it?

A: Not until the contract has been signed.

Q: What if I’ve paid my deposit and moved in only to find the property is not in the state it should be in?

A: If you are unhappy about any aspect of the condition of the property when you move in (damage, outstanding repairs, damage to décor or the level of cleanliness) – inform the owner/agent in writing immediately and keep a copy for your own records. If you fail to notify them about your concerns then you could find yourself paying for the previous tenants’ damage at the end of your own tenancy. It may also be possible to make a complaint under the Unipol DASH Code.

Q: How can I best make sure that I’m going to get my deposit back at the end of my contract?

A: You have a responsibility to return the property in the same condition that it was let to you, allowing for fair wear and tear.  So it is a good idea to make sure that when you sign your tenancy agreement, you:

There are many legitimate reasons why deductions may be made from your deposit. Click here for some tips on how to help avoid problems:

Second, arrange an inspection. Three weeks before your tenancy ends make sure that you have an end-of-tenancy inspection visit by the owner/agent. Ideally you should be present at that visit so that you can agree any work that you need to do with the owner/agent.

Before the inspection ask the owner/agent for a checklist of what they expect you to do.  If you are renting from a University or College or a larger owner, they may well have already provided you with a Tenants' Handbook or special End of Tenancy Notes that covers this.

Third, if you are paying energy, telephone and water charges, sort out the utility bills. Two weeks before you are due to move out you should contact all the utility companies (gas/electricity/telephone) and arrange for final readings to be taken. It is your responsibility to inform the utility companies that you are moving out and to request that your name be removed from the bills.

Fourth, make sure everyone does their fair share. If you are renting a shared house then you should leave the property in a fit state for the next set of tenants to move in. If you have signed a joint contract (as many students do) then you are jointly responsible for the whole house and it is important that the whole house is cleaned and left in a good condition

It is important that every occupant does his or her fair share of work. Avoid individual occupants leaving one by one towards the end of the tenancy and so leaving cleaning to one or two remaining tenants. Work out in advance who will clean what. Most students will clean their own bedroom but make sure you divide the responsibilities between yourselves for living rooms, kitchens, bathrooms, corridors, cellars and gardens. Generally, cleaning and clearing the kitchen and bathroom in a house is 50% of the task of cleaning the whole house.

Allow yourself plenty of time to clean the house at the end of the year.

Never have an end of house party on the last day. Always leave at least three days after any social event to clean up and move out.

Click here for a Deposit Inspection Checklist.

Examples of common deposit deductions

To give you an idea of what an owner will expect:

untidy bedroom messy lounge

Bedroom not properly cleaned
cleaning the room would cost about £20 and moving the furniture back to the appropriate room could cost a further £20-£30.

Clean all communal areas
To clean up the coffee stains and remove the rubbish from this table could cost £5. Therealso may be a call out charge.

unclean toilet
frosty freezer

Clean your toilet regularly
This could cost £40 to descale otherwise.

Fridge/freezer not defrosted
to have this defrosted, the water mopped up and wiped clean would cost about £40.

dirt kitchen1
dirty cooker

A kitchen left in very bad condition
To return this kitchen to a good condition would cost about £120.

Cooker not cleaned
To clean a cooker in a very bad condition can cost up to £95.

rubbish
communal space

Bag it and bin it
This would cost you over £60 to remove.

Vacuum all communal areas
This corridor could cost £20 to have cleaned commercially. Have you used any fire equipment inappropriately - these fire extinguishers cost £30 each to refill.

iron burn
left key

An iron burn on the carpet
If an ironing board is provided then any iron burn is entirely your fault. Iron burns on new carpets or in the centre of any carpet will mean paying for a new carpet - it is never possible to "patch" a carpet. The cost of a carpet will vary according to the size of the room and the type of carpet, but in the carpet is of industrial contract quality then a cost of £200-£400 is possible.

Failing to return keys on time
The cost of replacing a key (depending on whether it is a suited system) can be between £10 - £30. If a number of keys are not returned or there is a security implication then the locks and all keys may have to be replaced at very short notice (for incoming tenants) and this can cost around £200.

Other things to remember

Frequently asked questions about deposit returns

For deposits taken after the 6th April 2007, you should have received the agreed amount of deposit within 10 days of the end of your tenancy OR notification that money is to be withheld.  At the end, check whether you are leaving the property and its contents in the condition in which it was let to you - allowing for fair wear and tear - and check that you have paid your rent and any other expenses.  Then agree with your landlord or agent how much of the deposit should be returned to you. 

For deposits taken before 6th April 2007, under the Unipol Code your deposit should be returned within 6 weeks of the end of the tenancy.  If monies are to be retained the landlord or agent should write to you within the same timescale and provide reasonable details of any and all deductions. 

If your deposit is protected under Tenancy Deposit Protection you can use a dispute resolution procedure to help resolve your dispute. The information for each scheme varies:

The Deposit Protection Scheme (custodial scheme)

The Dispute Service (insurance based)

Mydeposits (insurance based)

If you are renting from a University of College they will have a complaints procedure, or you can use the procedure as outlined in the Government Approved Code of Practice for Educational Establishments. There are two Codes, one run by UUK and the other by ANUK and their procedures can be accessed below:

Check if your building is covered.

The Universities UK Code of Practice for University Managed Student Accommodation

or

The Office of the Independent Adjudicator for Higher Education (OIA)

The Accreditation Network UK Code of Practice for Student Accommodation Managed by Higher Education Establishments (HEE's)

If you are renting from a supplier in a larger building, you are likely to be covered by an Approved Code for larger buildings. You can check if your building is covered here.

and the Code complaints procedure can be found here.

For deposits not covered by the Tenancy Deposit Protection Scheme, or where students do not wish to use the TDP dispute scheme write a letter to the landlord/agent stating detailed reasons for disagreeing with the deductions (providing proof where necessary and check with your housemates that your facts are correct). Allow 14 days to respond and, if there is no response, seek advice from your students' union or other welfare agency.

No, because that would be a breach of your contract. It’s important to keep rent and deposits quite separate. If you are in dispute or feel you are owed money by the owner/agent then seek advice before taking further action.

If it’s a joint tenancy the answer is no. The owner/agent will obviously want to inspect the house and check all rent is paid etc before returning deposits. If there is no joint contract, it may be possible for you to come to an arrangement for the early return of the deposit.

No, not if the bills are in the names of the tenants – the utility companies will chase the named persons and not the owner/agent. If you share a house with the owner then an agreement could be reached for the bills to be taken from the deposit. Request a copy of the bills to ensure you are paying the correct amount.

In summary, a landlord does not have to take a deposit and can make charges at the end of the tenancy. Another slight twist on this would be a situation where a landlord makes an "administration charge" at the beginning of the tenancy. There have been incidences of landlords charging an administration fee to cover advertising, drawing up contracts etc., on the understanding that none of it would be returned at the end of the agreement and the landlord would cover any damages.

Section 212(8) of the Housing Act 2004 states that "tenancy deposit, in relation to an assured short hold tenancy, means any money intended to be held (by the landlord or otherwise) as security for -

(a) The performance of any obligations to the tenant

(b) The discharge of any liability of his

arising under or in connection with the tenancy.

One of the items covered by the 'admin charge' is as follows: "any repairs or replacement of broken items in the house (i. e hoover/iron/ironing table, etc) which normally would get deducted as expenses from the tenant's deposit, will now be repaired or replaced at the landlord's own expense."

What needs to be established is whether the item referred to above - and, indeed, any of the other items constituting the "administration charge" - 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 then it is not a deposit. The tenancy agreement should make clear which items constituting the admin charge will be refundable.

Sample Letters

Click here for a sample letter requesting your deposits are returned.

Click here for a sample letter requesting a breakdown of the reasons why deductions were made from returned deposits.


 
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