Tenancy Deposits: What Should Landlords Do?
The RLA’s advice
You need to seriously consider whether to take a deposit to protect yourself in case your tenant fails to pay the rent or damages the property. Some landlords, however, prefer not to take deposits and this is, of course, an option.
If you take deposits it is vital that you protect them under one of the statutory schemes. You need to decide whether to protect your deposits under an insurance backed scheme or the custodial scheme, where you have to pay over the deposit itself to the scheme.
Other matters to consider are tenantís wishes and the ability to use the deposit. If you are able to return the deposit quickly at the end of the tenancy because you had it, this will please tenants.
Your bargaining position over tenancy deposit disagreements could be helped if you are holding the tenancy deposit yourself.
The Importance of Inventories
Under the schemes if you want use the deposit to meet damage claims, it will in practice be essential to have a proper inventory/schedule of condition both at the beginning and end of the tenancy.
Otherwise, the tenant is likely to be given the whole deposit back. Landlords will have to ensure that proper procedures are put in place.
Data Protection Concerns
Concerns have been raised that having to register a tenancy deposit through any of the schemes will mean that the Government Agencies, particularly the Inland Revenue, may be able to obtain access to the records if they consider there has been tax evasion.
Although we are assured that appropriate data protection measures are in place, the Inland Revenue has recently achieved a notable success in accessing details relating to foreign bank accounts as part of its measures to counteract tax evasion. Undoubtedly, the Government will be able to obtain some valuable data relating to the private rented sector from tenancy deposit information.
If you haven't found the information you are looking for, try our Frequently Asked Questions (FAQ) page by clicking here