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What is The Tenancy Deposit Scheme and what does it mean for landlords?
The tenancy deposit scheme is intended to protect tenants from unscrupulous landlords or agents wrongfully withholding deposits.
Details on exactly how the scheme will work are fairly scarce at this stage but in essence it means that tenants will no longer need to go to court if they wish to dispute a landlord/agent’s decision. Instead, the tenancy deposit scheme will provide independent arbitration, where tenants and landlords cannot agree over the return of a deposit.
A similar scheme has been in operation in England since April 2007. Here, the deposit can be lodged with a ‘cstodial’ scheme which retains the deposit until the end of the tenancy. This scheme is paid for by the interest earned on the deposits lodged.
The alternative to this scheme in England is an ‘insured’ scheme, where the landlord retains the deposit but must take out an insurance which would cover the cost of arbitration, should it be required.
What does it mean for landlords?
Essentially, it becomes more important than ever to have an accurate Inventory and Condition report prepared before the start of the tenancy, and to have it agreed by the tenant. Where possible, this should be prepared by an agent or independent company, to ensure impartiality.
This report, which should be accompanied by a set of photographs, will be invaluable in defending any dispute by tenants. It may even prevent any dispute occurring, given that the tenant is aware of its existence.
