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Rent Deposits

“I am a residential landlord and use an approved scheme to hold deposits. Outgoing tenants often want the money back quickly to pay for their next flat. Can I pay this myself and recover the money from the deposit holder?”

You can but there are risks in doing so. In order to protect deposits, since April 2007 it has been mandatory for these monies to be lodged with one of three competing deposit schemes.

Tenancy Deposit Solutions, Deposit Protection Service and the Tenancy Deposit Scheme were set up to hold the deposit monies so that in the event of any insolvency of the landlord, whether bankruptcy of an individual or any corporate form of company insolvency, those monies cannot form part of the landlord’s monies that are available to pay to the creditors.

The deposit holder gives the tenant a deposit identification number and a separate one to the landlord. When a tenancy ends, each party can ask for the monies back online and quote their numbers. Each relies on the other having carried out the procedure in order to release the monies.

It can take up to 10 working days for the request to be processed, then another three days for the monies to arrive in the tenant’s bank account. In the event of any dispute about the level of the deposit that should be returned, these timings would be longer.

If the landlord pays the deposit monies back to the tenant and then seeks to recover it from the deposit holding body, the tenant may not deal with the releasing of the tenant monies swiftly, or even at all, which could cause problems for the landlord.

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