If, as a landlord, you take a deposit from a tenant to secure its obligations in the AST, you will need to use one of three government-approved deposit schemes to protect that deposit, being:
Deposit Protection Service (external link)
Tenancy Deposit Scheme (external link)
MyDeposits (external link)
All three schemes are authorised by the government to protect deposits for tenancies in England and Wales and offer a choice of two types of protection:
- custodial protection, where the scheme holds the deposit for the duration of the tenancy –this service is free as it is funded by the interest earned on the deposits held;
- insured protection, where you as landlord hold the deposit and pay the scheme a fee to protect it.
It is vital that any deposit taken is registered with one of these schemes within 30 days of the deposit being received. Landlords who fail to protect the deposit face harsh financial penalties including:
- a fine of up to three times the deposit amount; and
- the inability to serve a Section 21 notice to regain possession of the property.
Tenancy agreements
Here is our template AST, which contains an Annex 2 at which to add optional guarantor provisions.
Here are the optional guarantor provisions.
The AST and should be thoroughly reviewed to ensure that all gaps are filled in and, where there is a choice of wording highlighted in red, the correct wording is chosen and the remaining options are deleted.
It is important that the form of any guarantee is completed correctly, is signed by the guarantor in the presence of an independent witness, and is scrutinized before the tenancy agreement is signed.
It is also important, due to the difficulties it may cause in enforcing the terms, not to accept a Guarantee:
- where the document has been altered by the (prospective) guarantor without the consent of the landlord; or,
- from a guarantor that resides overseas.
Prescribed information
Whichever scheme you use, you will need to provide the ‘Prescribed information’ to the tenant within 30 days of protecting the deposit. This information must include:
- the address of the rented property
- how much deposit has been paid
- how the deposit is protected
- the name and contact details of the tenancy deposit protection scheme and its dispute resolution service
- the landlord’s (or the letting agency’s) name and contact details
- the name and contact details of any third party that has paid the deposit
- why the landlord would keep some or all of the deposit
- how to apply to get the deposit back
- what to do if the tenant cannot get hold of the landlord at the end of the tenancy
- what to do if there is a dispute over the deposit
The prescribed information should be completed and attached to the template AST as Annex 1.
Should you wish to use the scheme’s own templates for providing the prescribed information (and we would recommend that you do), these are accessible as follows:
Deposit Protection Service (external link)
Tenancy Deposit Scheme (external link)
MyDeposits (external link)
You need to subscribe to this scheme in order to download their template.
As well as providing the prescribed information to the tenant, you need to be aware of some other responsibilities when granting a tenancy.