What to do with the deposit
If your tenancy is covered by tenancy deposit protection regulations you must use one of the accepted schemes, and tell the tenant which one you are using within 14 days of collecting the deposit. You should put the details in the tenancy agreement,or in a separate document for the tenant.
At the end of the tenancy
At the end of the tenancy you must pay the deposit back within 10 days:
- if the deposit is in a custodial scheme and there is a dispute, the scheme will hold the deposit until a decision is made by the 'dispute resolution service' or the court. The deposit, or the relevant portion of it, must be returned within 10 days of the decision
- if the deposit is in an insurance scheme the contested amount must be transferred to the scheme until the dispute is resolved. Once the dispute is resolved the deposit, or portion of it, must be returned within 10 days of decision.
If you don't protect the deposit
If you don't place a deposit into a protection scheme:
- you cannot use the normal Section 21 (Housing Act 1988) procedure to get possession of your property (external link) at the end of the tenancy period
- tenants with a tenancy which started after 6 April 2007, can apply to court for an order requiring that the deposit is safeguarded. The court can order you to repay the deposit, or to place the deposit in a custodial scheme. The court can order the landlord to pay the tenant a fine three times the deposit amount within 14 days
- tenants with a tenancy which started after 6 April 2012, can apply to court for an order requiring that the deposit be safeguarded. The Court can order you to pay from one to three times the deposit amount depending on the seriousness of the non-compliance.
So make sure you follow the correct deposit protection procedure. Give a receipt and a written statement that details what the deposit covers. Make an inventory - a detailed list of the contents of the property - and note the condition of things on the list - digital photographs are ideal. Ask the tenant to sign and date it, sign it yourself, and keep a copy.