Landlords and lettings agents are legally obliged to protect tenant’s security deposits in a government approved scheme. The schemes are there to ensure that tenants receive their deposit back (or part of it) at the end of the tenancy as long as there are no disputes.

The deposit will need to be registered with one of the deposit schemes within 30 days of the deposit being paid by the tenant, and Prescribed Information must also be given to the tenant within 30 days. Failing to register the deposit can lead to heavy penalties for the landlord. The tenant can also take the landlord to court and the landlord may be liable to pay up to three times the deposit amount.

Monreal Shaw strongly recommend a detailed inventory and check-in report to be conducted prior to the commencement of the tenancy. This will record the condition of the property at the time of move-in, and a check-out should also be conducted at the end of the tenancy. These two reports will then be compared to one another and any differences in the condition of the property will form the basis of the amount of deposit given back to the tenant.

If there are disputes, the amount in dispute must not be allocated to either the landlord or the tenant unless an agreement has been reached. If no agreement can be made, either party may suggest using the Alternative Dispute Resolution service (ADR), whose decision will be final. If neither party wishes to use this service, they may be able to go to court.