Tenancy Deposit Schemes

I do not propose to go into great detail here, you can find the full answers to this question in our more extensive part of the website but I will briefly cover the important parts here.

Lets assume you have a £500.00 deposit and you agree that £300.00 should be returned to the tenant but you wish to keep £200.00 for damage to the carpet. The tenant though states that the damage was there when he/she moved in.

Custodial Scheme
Using the above example, if the deposit is held in the custodial scheme, both landlord and tenant would agree to £300.00 being transferred within 10 days to the tenant (because that amount is not in dispute). The tenant would then be able to raise a dispute about the remaining £200.00. You then have a choice. You may accept the use of the schemes alternative dispute resolution or you may decide that a court should decide who gets the disputed amount. If you choose ADR, their decision will be final and binding. The ADR will consider the inventory and any other evidence, make a decision and pay out whoever they think is better entitled to the disputed amount after looking at the paper evidence.

Insurance based scheme
Again, using the above example, you would return to the tenant the £300.00 not in dispute within 10 days. The tenant would then be able to raise a dispute on the remaining £200.00 that you have not returned. Once you have been notified by the insurance based scheme that a dispute has been raised, you must within 10 days transfer the £200.00 to the insurance based scheme who will then hold the money until the dispute is resolved. You then have a choice. You may accept the use of the schemes alternative dispute resolution or you may decide that a court should decide who gets the disputed amount. If you choose ADR, their decision will be final and binding. The ADR will consider the inventory and any other evidence, make a decision and pay out whoever they think is better entitled to the disputed amount after looking at the paper evidence.