Friday, September 02, 2005

Tenant deposits - important changes coming up

Tips for student deposits 01 September 2005

The start of a new academic year is fast approaching and many students across the country will have already begun the search for next year's accommodation. Over the coming weeks, as parents and students alike hand over cheques for deposits, many may not realise that from October next year such an easy arrangement will no longer be possible. In the meanwhile, the National Landlords Association urges landlords and student tenants to play fair on deposits and offers some tips to ensure that the exchange of deposits goes as smoothly as possible.

As part of wide ranging changes to regulation of the private rented sector under the Housing Act 2004, deposits will have to be placed in an authorised tenancy deposit scheme. Two forms of tenancy deposit scheme are envisaged: a custodial scheme and an insurance scheme.

Under a custodial scheme landlords will pay deposits into a specified account. The money will then be kept in the account until the end of the tenancy. Either the landlord or tenant can apply at any time after the tenancy has ended for the deposit to be returned to them. If both parties agree on how the deposit should be split the administrator of the scheme has to pay out the amounts within 10 days of receiving the request.

In the case of an insurance scheme the landlord keeps the deposit on the basis that at the end of the tenancy an amount agreed between tenant and landlord will be paid to the tenant. The insurance will come into play if, at the end of a tenancy, the landlord does not pay back part or all of a deposit within 10 days of a tenant's request. If this is the case the tenant can approach the scheme administrator. The landlord will then be required to pay the amount into an authorised account within 10 days of receiving notice from the administrator. Once a dispute has been settled the administrator must pay the tenant within 10 days. The insurance will come into effect if the landlord fails to pay the deposit into the account as requested.

I haven't decided what method to use - they both involve extra admin. I have also seen other ways of dealing with this issue. No doubt we'll read a lot more about this.

Chris

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