Historically, deposits have been the most common cause of disputes between landlords and tenants. At the start of a tenancy, the tenant hands over a significant sum of money as a form of surety to protect the landlord from loss or damage to their property which occurs while the tenant is living there. So what is Prescribed information and why is it needed?
A brief history
Even with the most efficient system of check-in, check-out and interim property inspection reports, when the time came for the tenant to leave, arguments would frequently arise about whether the property had suffered normal wear and tear or the tenant had been negligent or wilful in their treatment of it.
Questions of responsibility immediately gave rise to disagreements over liability and while the landlord retained the deposit, they also held all the cards. Some landlords would withhold some or all of the deposit and the tenant had no option but to accept this, short of expensive, stressful court action.
Housing Act
This inherent imbalance in the relationship was addressed by the Housing Act 2004 and the Tenancy Deposit Scheme regulations, introduced in 2007.
There are now three officially recognised Deposit Protection Schemes in England and Wales:
Instead of paying the landlord, the tenant places their deposit into one of these schemes. I
The regulations require the landlord to provide the tenant with what is known as Prescribed Information.
This tells the tenant everything they need to know about how the scheme works, the procedure that must be followed in the event of a dispute and a number of other important details.
Every landlord is legally obliged to be a member of a Deposit Protection Scheme and must therefore comply with the requirement.
Prescribed Information
There are four elements to the prescribed information, which must be given to the tenant and anyone who is classed as a Relevant Person. For example, a guarantor would fit this classification.
– The amount of the deposit
– The address of the property
– The name, address and contact details of the administrator of the?tenancy deposit scheme which is holding the deposit
– The name, address and contact details of the landlord and tenants including any third parties who have contributed to the deposit
As the landlord, you need to give the tenant full details of the administrator of your Tenancy Deposit Scheme.
This must include the street and website addresses as well as contact information, including telephone number and email address. Both landlord and tenant must sign to confirm their understanding and acceptance of the information.
Housing Act
The government has prepared a leaflet called ‘What is the Tenancy Deposit Scheme?‘ which explains how the legal provisions contained in the Housing Act 2004 operate.
It clarifies the process under which the landlord may apply to withhold some or all of the deposit at the end of the tenancy. It also makes clear the limitations on the landlord’s power to do this.
It’s particularly helpful in detailing what needs to happen in the event of a dispute over the deposit. It’s no longer a matter for the landlord and tenant to battle out between themselves because the interposition of a third party with statutory authority means difficulties can be settled without the need for litigation.
This is in line with the general obligation recommended by the courts to seek alternative methods of resolution as a faster, cheaper and more collaborative response to any contentious matter.
The leaflet covers several other issues, many of them uncommon, but occasionally needing to be dealt with, such as a situation in which one of the parties is not contactable at the end of the tenancy.
Although it’s perfectly acceptable to present the information in a separate document, it’s becoming common practice to include explicit reference to the provisions of the Tenancy Deposit Scheme in the tenancy agreement.
You can’t exclude its operation but you can specify a procedure and set of circumstances in which money from the deposit can be retained. This enables the parties to come to their own resolution and call on the TDS only if they can’t agree.
Mandatory
As the landlord, you are obliged to provide the Prescribed Information no later than 30 days after the tenant pays the deposit into the scheme.
This applies at the beginning of an assured shorthold tenancy (AST), but if it rolls over into a new fixed-term AST or as a periodic tenancy, you won’t have to issue it again, provided that none of the material circumstances change.
If the same scheme is used, the property is the same one and both tenant and landlord remain the same, there is no need to provide the information a second time, assuming that it was correctly supplied the first time.
What happens if you don’t comply within 30 days?
You will be automatically in breach of the Housing Act and may be liable to pay compensation to the tenant. This may sound harsh, but since it is very easy to comply, there’s really no reason to risk it.
In our experience at Inventory Base, the system can benefit both parties and represents a measured, even-handed solution to ensuring renting in the private rental sector is safe ad secure for tenants and landlords.