Rent Deposit Schemes

There are two major deposit schemes

  • The Custodial Scheme
  • Insurance Based Scheme

Custodial Scheme

  • This is the most appropriate scheme for landlords who hold a small number of rental properties. The scheme provider holds the deposit on behalf of landlords and tenants
  • Neither the landlord nor the tenant pay any fee to use the scheme
  • At the end of the tenancy, the landlord and tenants must jointly ask for the deposit to be repaid
  • If they agree on the proportion the deposit will be distributed accordingly plus any surplus interest it may have generated
  • In case of a dispute between landlord and tenant the scheme offers an Alternate Dispute Resolution (ADR) service to assist the parties
  • The tenant can also lodge a claim to a court under small claims, the scheme provider will then distribute the deposit in the light of the decision of the court or ADR

The Insurance Based Scheme

  • This scheme is more suitable for professional landlords with a large number of rented properties or for letting agents
  • Under the insurance-based scheme the landlord retains the deposits, however, pays a fixed premium to the scheme provider
  • In the case of a dispute between the Landlord and the Tenant, the Insurance scheme provider will intervene. It will offer an Alternate Dispute Resolution service
  • The landlord then must hand over the deposit to the insurer until the dispute is resolved either by ADR or by court
  • The failure of a landlord to deposit the amount to the insurer will not affect the tenant as the insurer will compensate the tenant

Rent Deposit Scheme providers

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