Up to now, landlords have had the choice of three schemes to protect their tenant's deposit:
1. The Deposit Protection Scheme (DPS): the landlord pays the deposit to the scheme and registers it. The scheme hold the money until the end of the tenancy and pay out the proportions that are agreed to each party directly. This scheme is free to use and is known as a custodial scheme.
2 & 3 The Dispute Service (TDS) & Tenancy Deposit Solutions (My Deposit): the landlord can keep the tenant's deposit but they must register it with either of these schemes. The landlord pays a premium to the scheme to protect the tenant if money due back to them at the end of the tenancy is not paid. These are known as insurance schemes.
From 1st April, two new options will be available, both are insurance based schemes:
1. DPS: the custodial scheme provider will be starting their insurance based product. More information can be found here: www.depositprotection.com/insured-deposit-info
2. Capita TDP: a brand new insurance based scheme. More details here:
www.capita-tdp.co.uk
Remember, landlords must protect a tenants deposit within 30 days and provide the
tenant with the appropriate scheme's Prescribed Information or the tenant can claim up to 400% of their deposit back from the landlord.
Landlords must ensure that deposits are continuously covered, i.e. if the tenancy renews you must inform the scheme provider and give the tenant the Prescribed Information again. Each scheme works a little differently so please make sure you check with your provider regularly and you are clear on the requirements of your chosen scheme.
