#AskTDS: "What happens if I don't protect my tenant's deposit?"
This week, Debbie Davies, Assistant Director of Business Development at Tenancy Deposit Scheme (TDS), answers a question we often receive from landlords: “What happens if I don’t protect my tenant’s deposit?”
There are so many regulations that apply to landlords, which is why it is important for landlords keep up to date with their legal responsibilities when letting a property.
Tenancy Deposit Protection (TDP) legislation
From 1 April 2013, a key legal requirement for landlords renting out a property in the private sector is Tenancy Deposit Schemes Regulations (Northern Ireland) 2012 legislation, where a landlord must use a government approved TDP scheme to register a tenancy deposit for protection.
Protecting the tenancy deposit may seem like a small part of the letting transaction, but it’s a key part of the process that you should not ignore.
Although TDSNI does not police the legislation, a landlord could be faced with a fine or court action if they do not comply with the requirements correctly.
TDP requirements for landlords
Under TDP legislation landlords must register the tenancy deposit for protection within 14 days of receiving it.
The tenancy deposit, also known as a security deposit, is the monies paid by the tenants to be held as security against the tenants’ obligations under the terms of the tenancy agreement.
When the tenancy deposit has been protected the landlord must serve some key details, called prescribed information. Landlords must serve on the tenants and any relevant person (someone who pays the deposit on behalf of the tenants) with the most up-to-date prescribed information, within 28 days of receipt of the deposit, along with the TDP scheme leaflet.
TDSNI helps its members comply with this by pre-populating the prescribed information ready for the you to serve.
It pays to be concise when serving the prescribed information; don’t think that it’s ok to serve the prescribed information to one tenant, it must be served to all tenants and any relevant persons.
When receiving the deposit, landlords must ensure they’ve provided the tenant with:
- the contact details of the landlord or letting agency
- the tenancy address
- the value of the deposit
- the name and contact details of any third party who paid the deposit – who is referred to in legislation as a ‘relevant person’
- the name and contact details of the tenancy deposit protection (TDP) scheme and its dispute resolution service
- reasons for why money may be deducted from the deposit at the end of the tenancy (for example, if a tenant damages the property and the landlord incurs repair costs) in the deposit use clause
- how to claim the deposit back at the end of the tenancy (this may differ depending on which scheme you use)
- what to do if there’s a dispute over the amount of the deposit to be returned at the end of tenancy
As the TDP Legislation has been in place for over 6 years now a landlord needs to understand how they can ensure that their tenants’ deposit is protected.
TDS offers the option of using either an Insured or Custodial deposit scheme, both options, TDS Custodial and TDS Insured, are available for landlords and letting agents
What happens if you don’t protect your tenant’s deposit?
If you don’t protect your tenant’s deposit, they can report you to the local council’s environmental health department who can impose a fixed penalty of three times the deposit amount.
It pays to get it right first time so as a landlord you can carry on managing your property with confidence.
TDS is always striving to help landlords, agents and tenants understand their rights and responsibilities through blogs. We speak at numerous industry events across the country and publish magazines, documents and guides to help keep agents, landlords and tenants up to date with any changes.
For more landlord tips please view our landlord FAQ page.
Tenancy Deposit Scheme (TDS) is a Government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.
We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.
TDS Insured Scheme: where a TDS member can hold the tenancy deposits as stakeholder during the term of the tenancy.
TDS Custodial Scheme: where TDS hold the deposit for the duration of the tenancy.
TDS Academy: TDS provides property professionals with invaluable training in tenancy deposit protection and tenancy deposit disputes.
TDS Northern Ireland: TDS is Northern Ireland's leading and only not for profit tenancy deposit protection scheme.
TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.
These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.