What is the Deposit Protection Scheme (DPS)? Letting Agents Manchester are here to answer all of your questions…
Since the 6th April 2007, the Deposit Protection Scheme is a legal requirement for all Assured Shorthold Tenancies (ASTs) and for periodic tenancies as well.
The Deposit is a sum of money paid by the tenant before moving into the property. This is security in case there is any significant damage caused by the tenant to the property which needs to be paid for. This allows the landlord to be secure in knowing any future sums will be covered by the tenants. The tenants will receive their deposit back at the end of the tenancy if they take care of the property. This gives tenants an incentive to take care of the property as they want to receive the sum of money back at the end of the tenancy.
As a landlord, you are legally required to hold your tenants’ deposit in a government approved tenancy deposit scheme.
Some schemes which are currently used and recommended by letting agents manchester are:
- The Deposit Protection Service
- My Deposits
- Tenancy Deposit Scheme
Each of these schemes are good for both landlords and tenants and we recommend any of these to our clients.
What do you do (as a landlord) once you have received the tenants’ deposit?
Upon receiving your tenants’ deposit, you have 30 days to deposit the funds in a government approved tenancy deposit scheme.
It is extremely important that you place the correct deposit down, as it is quite easy to get both the security and holding deposit mixed up. However, it is the security deposit which is covered within this scheme – not the holding deposit, that is completely different.
Within this 30-day window, as a landlord, you must provide your tenants with the following information:
- The full address of the property.
- Confirmation that the deposit money has been received.
- How to recover the deposit (if needed)
- The details of which Deposit Protection Scheme was used and the contact details for the organisation. And if possible, the contact details for the conflict resolution service within that organisation
- Your personal or your agents contact details
- Contact details of the person who has paid the deposit
- Instructions for your tenants should you be unavailable at the end of the tenancy
- Instructions on what to do should there be a dispute over the deposit
Doing all these steps is the minimum legal requirement for landlords when moving a new tenant into their property.
However, in addition to the above points, there is also the option to opt into the free dispute resolution scheme.
This is an optional service and requires both parties to evidence that they have both consented and signed onto the service. This is a scheme which helps resolve any disputes between the landlord and the tenant; it can be an alternative to using the courts to settle any disputes.
Top Tips by Letting Agents Manchester :
- Make sure that you have a tenancy agreement in place that has a ‘Deposit Use’ clause which clearly states what can be done with the deposit and is easy for both the tenants and landlords to reference.
- Make sure an inventory of the property is carried out, with pictures taken if possible. This sets out the condition of the property before the tenants move in and is good evidence if a claim needs to be made in the future.
- Think about the end of the tenancy – you will need to do a checkout of the tenants to match the inventory when they first moved in.
Here at Property Fit, we are happy to share with you that our sister company PF Property Management is here to help you with all of this! They are a letting agency which will hold your hand through the whole process of moving in your tenants with their full management service.
They are experts when it comes to the Deposit Protection Scheme and will be happy to help you! Details on their services can be found here, and if you have any queries about the DPS or our sister company, please don’t hesitate to contact us today!