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Friday, July 11, 2008

Two thirds of landlords avoid TDS

Landlords should be aware by now that if they are taking a rental deposit that they should use one of the government approved schemes with respect to the protection of their tenant's deposit. This is the so called Tenant Deposit Scheme (TDS).

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However, according to the providers of the government's custodial scheme the Deposit Protection Service (DPS) 62% of lanldords are failing to protect their tenants deposits.

What happens if a landlord takes a rental deposit and does not use one of the approved schemes?

Landlords that fail to protect their tenants deposit will be:

a) Unable to use ‘accelerated possession procedure’
Currently, a landlord can obtain an order for possession of an assured shorthold tenancy at any point after the first six months of the tenancy providing any fixed term has expired and the landlord gives the tenant at least two months' written notice (Under Section 21 of the Housing Act 1988). This is known as ‘accelerated possession’.

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However, under Tenancy Deposit Protection (TDS), the landlord is unable to regain possession of the property using the usual 'notice only grounds', if the deposit has not been safeguarded and the prescribed information passed onto the tenant within 14 days of the landlord receiving it.

b) Payment to the tenant
Tenants can apply for a court order requiring the deposit to be safeguarded or the prescribed information to be given to him about the scheme in which the deposit is safeguarded.

Where the court believes that the landlord has failed to comply with these requirements, or the deposit is not being held in an authorised scheme, the court must either order the landlord within 14 days of the making of the order to repay the deposit; or order the landlord to pay the deposit to the custodial scheme administrator.

The court must also order the landlord to pay to the tenant three times the deposit amount within 14 days of the making of the order.

Avoid the TDS

There is potentially a way around using one of the approved schemes by landlords not taking a rental deposit at all. Have a look at Bee in the bonnets post on the subject.

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