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Buy-to-let
Tenancy Deposit Schemes
Tenancy deposit schemes came into law in 2007. They aim to protect tenants' deposits from dishonest landlords and agents and to offer independent arbitration in any dispute about returning all or part of the deposit at the end of a tenancy. Tenants are more likely to look after the property if they know their money is being held as part of an official scheme.
Every agent in England and Wales must be a member of a tenancy deposit scheme; there are three government-authorised schemes to choose from:
Custodial scheme – known as the Deposit Protection Service (DPS), this is the only custodial scheme available. The scheme is funded by the interest earned from the deposits it holds. The custodial scheme is completely free to use.
Insurance-based schemes – There are two insurance-based schemes: the Tenancy Deposit Scheme (TDS) and Tenancy Deposit Solutions Ltd (TDSL). TDS is aimed mainly at letting agents, while TDSL is for landlords, although both can join either scheme.
In insurance-based schemes, the agent or landlord holds the money in a separate client account. TDS or TDSL charge the agent (or landlord) an annual fee to insure against the landlord failing to return the deposit (less any agreed deductions).
Within 14 days of receiving the deposit, the landlord or agent must tell the tenant in writing which deposit scheme has their money.
Winkworth offices are usually members of the custodial scheme (DPS) or insurance-based (TDS) scheme. Ask your Winkworth letting agent about the scheme they use, or see the Useful contacts list at the end for more information.
At the end of the tenancy, an inventory and check-out will be done. You and your tenant must agree on any deductions to be taken from the deposit. If you can't agree, the case will go to the independent arbitration process of the deposit scheme that you or your agent belongs to. When any deductions have been agreed or decided by the independent arbitrator, this amount of the deposit must be released to the ex-tenant within 10 days.
