Protecting Deposits

Protecting Deposits

Landlords usually ask a new tenant to pay one month's hire in advance and a deposit. The deposit is held by the landlord till the tenant leaves the property. If there is damage to the property or rent arrears the owner uses the deposit to cover the costs.

Many landlords fail to protect the deposit. There are types of authorised deposit schemes available in the UK. They are custodial or insurance based schemes.

Custodial - this type of protection requires the landlord to pay the total quantity of the deposit to a registered scheme. The money is held in the scheme until the tenant leaves the property. Providing there are no disputes the deposit is paid back to the tenant. Where there is a dispute the scheme uses an adjudicator to arbitrate between landlord and tenant. The adjudicator's determination is normally final.

Insurance - with an insurance type scheme the landlord retains the complete deposit. The landlord pays a price for insurance to protect the deposit. The insurance should be taken with a government approved scheme. When the tenant leaves the property the owner repays the deposit back to the tenant. Insurance type schemes even have an adjudicator service in case there's a dispute. If a dispute does come up the adjudicator would require the owner to pay the complete deposit to the scheme while the dispute is investigated.

A landlord has 28 days to register a deposit with either a custodial or insurance type scheme. Information regarding the registration of the deposit have to be supplied to the tenant. Under the Housing Act there's a prescribed format for info to be supplied. The landlord may be taken to court by the tenant where the data has not been equipped within the correct format. Tenants have the proper to go back six years before taking motion towards the landlord.

Where the owner fails to register the bond there are hefty penalties. The landlord might be required to pay the tenant a sum three times more than the deposit; or they are often required to pay back all rent plus a penalty or the owner might lose the appropriate to evict the tenant from the property the decision on the penalty is taken by the court.

Some landlords say they do not take deposits they only ask the tenant to pay two months lease in advance. If the tenant pays rent month-to-month and the landlord always has a float of 1 month's rent this is identical as taking a deposit and the rules regarding failure to register a deposit will apply.

At present there are only 4 approved tenancy deposit schemes. Data could be discovered on the website.

Every time a tenancy is renewed the insurance on the deposit must even be renewed for instance if the owner has a six month-to-month Assured Shorthold Tenancy and writes a new tenancy agreement at the end of the six months then the deposit should also be renewed. To save lots of on expenses many landlords problem one tenancy for a fixed term period with a clause stating the tenancy turns into a month-to-month contractual tenancy on the finish of the fixed term. By having one tenancy at some point of the time a tenant is in the property the landlord want only pay one payment to protect the deposit.

For more information about Hotpads apartment deposit check out our web page.



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