With affect from the 6th April 2007 all deposits, up to the level of £25,000, taken by landlords for Assured Shorthold Tenancies in England and Wales must be protected by a tenancy deposit protection scheme. Tenancy Deposit Protection has been introduced to ensure good practice in deposit handling, so that when a tenant pays a deposit, and is entitled to get it back, they can be assured that this will happen. It will also encourage tenants and landlords to have in place, from the outset, clear agreement on the condition of the property through the use of inventories.
The landlord not the tenant – will have the option to choose whether to safeguard the deposit in the custodial or insurance-based scheme. A landlord will have 14 days to safeguard a deposit from the day he receives it. The landlord will have to provide the tenant prescribed information about the scheme safeguarding the deposit within 14 days. To avoid disputes having to go to the courts, both schemes will be supported by an Alternative Dispute Resolution (ADR) service, although the use of this will not be compulsory. When the landlord and tenant agree how the deposit should be returned, in full or in part, it must be paid back within 10 days.