Tenancy Deposit Protection - What it means?

LPG Property Management in Portstewart

2nd January 2019

Tenancy Deposit Protection - What it means?

Tenancy Deposit Protection (TDP) means that landlords who collect deposits, or agents who do so on their behalf, must join a statutory scheme to ensure tenants deposits are returned, or part of it back, if they have kept a property in good condition. Disputes over how much should be returned will be mediated by an independent dispute solving service. New regulations now mean that landlords in Northern Ireland who receive a deposit in relation to a private tenancy, on or after 1 April 2013, must protect the deposit with a government approved scheme.

There are three authorised tenancy deposit schemes. Two are insurance based and the third is custodial called TDSNI - Tenancy Deposit Scheme Northern Ireland. We at LPG Property Management favor the custodial scheme T.D.S. Northern Ireland as we feel it offers the best benefits to our landlords and that it is free. Added to this it is being endorsed by Landlords Association Northern Ireland (L.A.N.I) a reputable organisation designed to provide the best advice and guidance to landlords and letting agents within Northern Ireland.

All three schemes provide a free dispute resolution service in the event of a dispute about the return of the deposit.

Under all three schemes, the tenant pays the deposit to the landlord or agent in the usual way. Under the insurance-based schemes, the landlord or agent retains the deposit and pays a premium to the insurer (cost to landlord). Under the custodial scheme the landlord or agent pays the deposit into the scheme (free to use).

Within 14 calendar days of receiving a deposit the landlord or agent must give the tenant details about how their deposit is being protected. Don't fall foul of these timescales as the penalties are stiff. If you fail to register and pay your Tenant's deposit to a scheme within the appropriate timescale, your Tenant can apply to the local council for sanctions against you. If the local council is satisfied that you as the Landlord has failed to comply with the regulations, they must order you to pay the Tenant up to three times the amount of the deposit. In addition to this they may also order you to submit the deposit to an approved scheme.

- What it means?

The introduction of tenancy deposit schemes for the first time in Northern Ireland is seen as a positive step in the regulation of the private rental sector. It will provide benefits for both landlords and tenants by encouraging a more professional approach to tenancy deposit practice minimise disputes and will go some way towards improving the sector's reputation as a desirable housing option.

Any deposit taken by a landlord or agent in connection with a private tenancy on or after the 1st April will by law have to be protected in one of the approved tenancy deposit schemes. Failure to protect the deposit or abide by the requirements of the Scheme may lead to local councils imposing a fixed penalty or possible court action.

Custodial Option

The landlord/agent is responsible for protecting the deposit with a tenancy deposit scheme within 14 days from receipt from the tenant. The landlord/agent must also pass The Prescribed Information (key information about where and when the deposit is protected) to the tenant within 28 days from receipt of the deposit to fully comply with the legislation.

  1. Landlord/agent joins TDS Northern Ireland custodial scheme (one off process)
  2. Landlord/agent is responsible for protecting the deposit within 14 days of receiving it.
  3. The landlord/agent is also required to supply / pass to the tenant the "Prescribed Information" within 28 days of receiving the deposit.
  4. TDS holds the deposit in a designated bank account for the duration of the tenancy.
  5. Landlord/agent specifies how the deposit should be to be returned at the end of tenancy.
  6. The tenant confirms the deposit amount to be returned.
  7. Once the tenancy has expired it is then the tenant's responsibility to claim their deposit back from T.D.S. Northern Ireland using their DAN number and claiming the deposit back on line. Once the process has started there is a maximum of 30 working days for the landlord to respond to the claim / proposal. Failure to response by the landlords after the 30 days will result in the deposit being refunded. The deposit money is returned as requested within five working days if no dispute. If a dispute arises between the tenants and the landlord, the landlord has a further 10 days to gather all the evidence required over and above the initial 30 days as stated earlier.

Custodial Option Dispute Resolution Mechanism (DRM) process

If the landlord/agent believes the tenant has broken the agreed contract terms (such as unpaid rent or damage to the property) and the tenant (s) disagree then a free dispute resolution service is available to resolve the issue. The case will then be referred to an independent adjudicator. Any undisputed deposit amount will be returned to the tenant, without waiting for adjudication.

  1. Tenant raises a deposit dispute with the scheme and submits evidence.
  2. Landlord / agent submits evidence.
  3. Adjudicator reviews evidence supplied by all parties within 20 working days of receiving the case.
  4. Adjudicator comes to a decision and will inform all parties of the decision within 5 working days.
  5. The landlord/agent and tenant have 10 working days to challenge the decision, but only if the adjudicator has erred in fact or law.