Deposit Protection Scheme

About The Legislation

As part of the Housing Act 2004 the Government is introducing tenancy deposit protection for all assured shorthold tenancies (ASTs) in England and Wales where a deposit is taken. From April 6th 2007, all deposits paid under an AST have had to be protected within 14 calendar days of receipt by the landlord.

The legislation aims to ensure that tenants who have paid a deposit to a landlord or letting agent and are entitled to receive all or part of it back at the end of that tenancy, actually get it.

Who is affected?

The legislation covers virtually all new AST contracts through which private landlords let property in England and Wales.
However, the following will not need to be registered with a tenancy deposit protection scheme:

• resident landlords (those living in the property)
• landlords of tenancies with rent of over £25,000 a year *
• company lets
• student accommodation let directly by universities or colleges.

* This amount will rise to £100,000 from 1st October 2010

Deposits taken before 6 April 2007 do not need to be protected by a scheme such as The DPS. However, as an existing tenancy is renewed and a landlord agrees a new fixed-term tenancy, the initial deposit taken must then be lodged with a tenancy deposit protection scheme.
Why is legislation needed?
The return of a deposit at the end of a tenancy is by no means guaranteed. For example, in 2006/7:

• 64% were returned in full
• 20% were returned in part
• 16% were not returned at all

The reasons given by landlords for withholding some or all of a deposit were:

• damage to the property (26%)
• cleaning the property (30%)
• unpaid rent or bills (3%)
• other reasons (32%)

Over half (52%) of tenants who had some or all of their deposit withheld felt that it had been withheld unjustifiably. The new tenancy deposit protection schemes are working to ensure that deposits are returned on a fair basis to tenants, which is in every landlord and tenant’s interests.