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Tenancy Deposit Protection
The Tenancy Deposit Protection (TDP) scheme came into force on 6th April 2007.
The new legislation, introduced by the Housing Act 2004, which has been designed to protect tenants from unscrupulous practice concerning the holding and return of deposits, will apply to all Assured Shorthold Tenancies that begin on or after the implementation date (currently 6th April 2007), as well as to all tenancies renewed after that date.
All landlords will be required to join a statutory TDP scheme, to ensure that each tenant's deposit is safeguarded. The scheme will also provide a dispute resolution service, if there is a need to sort out any problems at the end of the tenancy.
There is a choice of three schemes that landlords can join. One is described as a "custodial" scheme, the other two are "insurance based" schemes. Under the custodial scheme, a landlord must first register with the Deposit Protection Service (DPS); a deposit may then be paid by the tenant to the landlord, who in turn must pay the deposit into the scheme. At the end of the tenancy, the DPS hands back the deposit, but if there are any issues to be resolved these may be referred to an independent dispute resolution service.
The first of the insurance based schemes is known as the Tenancy Deposit Scheme (TDS) and this has already been in operation for some time with the Royal Institution of Chartered Surveyors (RICS), the Association of Residential Letting Agents (ARLA) and the National Association of Estate Agents (NAEA) - in fact ARLA and NAEA are shortly expected to merge. If a landlord lets his property through a letting agent who keeps the deposit and is a member of one of these organisations, then they are already covered. Any disputes about are dealt with by alternative dispute resolution. The second of the insurance based schemes is designed for landlords who want to manage their own properties and deposits. Tenancy Deposit Solutions Ltd (TDSL) has been devised by the National Landlords Association (NLA); landlords pay to join the TDSL scheme and then pay a fee for each deposit held.
Tenants are entitled to demand "prescribed information" from the landlord about the scheme their deposit is held under, which must be provided within fourteen days after the tenancy begins. Failure to do so - and to produce proof to the tenant - will have serious consequences and will result in the landlord being fined and forced to return the deposit to the tenant. He will also be unable to regain possession of his property by the serving of a Section 21 Notice, or to enforce the terms of the tenancy agreement by making deductions from the deposit at the end of the tenancy.
Acknowledgement: www.direct.gov.uk/en/TenancyDeposit
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