Landlords: Which Deposit Scheme?

Landlords: Which Deposit Scheme?

Deposit schemes can be divided into 2 categories:

1)    Custodial schemes: The landlord lodges the full deposit with the respective scheme.

2)    Insurance backed schemes: The landlord registers the deposit with a scheme for a small fee, but retains possession of the deposit for the duration of the tenancy. The fees are payable by the landlord and act as an insurance against the value of the tenant’s deposit.

Currently, there are 3 such providers.

- Tenancy Deposit Scheme (TDS) https://www.tds.gb.com/

This is an insurance backed scheme. There is an annual charge for landlords, starting from about £13.00. The landlord holds the deposit.

Fees cover protection for the life of the fixed term tenancy plus subsequent periodic tenancies continuing on the same terms. 

The Tenancy Deposit Scheme offers a free and impartial dispute service if required at the end of a tenancy.

- Deposit Protection Services http://www.depositprotection.com/

This provider offers both the custodial and insurance backed schemes. The custodial scheme is free, whilst there is a one off charge starting from about £15.00 for the insurance backed scheme.

With regard to the insurance backed option, there are no registration or annual renewal charges.

The Deposit Protection Service offers a free and impartial dispute service if required at the end of a tenancy.

- My Deposits http://www.depositprotection.com/

This is an insurance backed scheme. There are membership and annual charges for the landlord. The membership fee starts from about £36.00, while running fees start from about £18.00.

Fees cover protection for the life of the fixed term tenancy plus subsequent periodic tenancies continuing on the same terms. 

My Deposits offers a free and impartial dispute service if required at the end of a tenancy.

Further considerations:

The primary question a landlord needs to ask themselves, is whether they wish to hold the deposit themselves or let a third party do so. It should also be noted that whether the landlord chooses a custodial or insurance backed scheme, the deposit always remains the property of the tenant.

There are also some deposits that are not required in law to be held in one of these schemes. These include company lets, lodgers, student accommodation let out directly by the institution, and tenancies where the rent is above the maximum threshold.

One should check with the specific body for further details.