FEBRUARY 01, 2017 | BY A & S Property
Average tenancy deposit edges closer to £1,000
The average tenancy deposit paid by tenants in England and Wales stands at £970.18, but in London the figure has reached a record-high of £1,831.14, on average, according to The Deposit Protection Service (The DPS).
Sunderland had the lowest average deposit, with the figure for properties with its ‘SR’ postcode averaging less than three times lower - £490.13 - than that for London.
When renting out a property, most landlords choose to take a deposit from the tenant prior to the tenancy starting. The deposit gives a level of protection to landlords and means that should the tenant breach the terms of the tenancy agreement, such as causing damage or not paying rent, you can then make appropriate deductions from the tenant’s deposit.
Deposits taken on assured shorthold tenancies in England and Wales by landlords or letting agents must be protected within 30 days in any one of three government-backed insurance based or custodial deposit protection schemes operated by MyDeposits, Deposit Protection Service (DPS) and the Tenancy Deposit Scheme (TDS).
The insurance product enables landlords or agents to retain the deposit during the tenancy but in return pay a protection fee to the scheme.
The custodial scheme allows landlords or agents to hand over the deposit for protection during the tenancy, with no fees attached. The scheme is funded entirely from the interest earned from the deposit pool.
There are separate tenancy deposit protection schemes in Scotland and Northern Ireland.
The three appointed scheme administrators in Scotland are Letting Protection Service Scotland, Safedeposits Scotland and MyDeposits Scotland.
In Northern Ireland, the schemes are Deposit Scheme Northern Ireland, MyDeposits Northern Ireland and Letting Protection Service NI.
But although it has been mandatory to hold a tenancy deposit in a tenancy deposit scheme since 2007, as many as 300,000 landlords are estimated to be running the risk of a heavy fine for not placing money into a government authorised scheme, research reveals.
Tenants can apply to a local county court if they think their landlord has not used a deposit protection scheme when they should have, and if found guilty, the court can order the landlord to pay up to three times the deposit within 14 days of making the order.
Landlords could also face penalties if their agent failed to comply with the tenancy deposit regulation.
Julian Foster, managing director at The DPS, said: “It’s important that landlords have protection against damage and other problems that can arise when they rent out property, but tenancy deposits can be demanding sums for tenants to raise when they move.
“However, both parties can have peace of mind over the money when it is protected with The DPS, with our secure and easy processes backed up with a free, impartial Dispute Resolution Service on the rare occasions it is needed.
“The DPS is the UK’s largest protector of tenancy deposits, and we’ve been entrusted with over 4.7m since launching a decade ago.”
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