Which landlords will have to comply with the regulations?
The types of tenancy to which these regulations relate are described in the Article 3 of The Private Tenancies (Northern Ireland) 2006 Order. If you take a deposit from your tenant on a private tenancy, you must also comply with the tenancy deposit regulations.
Landlords of the following types of property are not required to register and so will not have to comply with tenancy deposit regulations:
- A fee farm grant;
- A tenancy for a term exceeding ninety nine years, unless the tenancy can be terminated by providing notice to the Tenant;
- A tenancy belonging to the Crown, a government department, the Executive or a registered housing association;
- Holiday lets.
The Regulations do not apply to tenancies outside Northern Ireland.
I am a landlord who lives overseas. Will the regulations apply to me?
The Regulations will apply if you receive a deposit in connection with a tenancy that is in Northern Ireland and you are not otherwise exempt. You will also need to provide a correspondence address in Northern Ireland.
What will the regulations mean for me?
The Regulations require that you must protect the deposit with an approved tenancy deposit scheme within 14 days of receiving it, for the duration of the tenancy.
You must also provide the tenant with the Prescribed Information about the tenancy, the deposit and the scheme that will be protecting it within 28 days of receiving it.
What happens if I use a letting agent?
As the person who requires a deposit to be taken, the duties in relation to tenancy deposits rest with you the landlord. This does not mean that you cannot use a letting agent to act on your behalf to manage a tenancy, as may happen now.
If you do use a letting agent, it will be in your interests to satisfy yourself that they are acting in accordance with the Regulations, depending on what they are contracted to do. Any sanctions imposed as a result of an application by the tenant for non-compliance with the regulations, would apply to you as the landlord. Your agent may however have assumed contractual responsibility for protecting the deposit, we recommend you check the terms of business.
I am an accredited landlord. Will I be exempt?
When will tenancy deposit schemes be implemented?
From 1st April 2013.
How will tenancy deposit schemes work?
The tenant will pay the deposit to you or your agent, as now. You will be responsible for ensuring that the deposit is protected with a Scheme until the end of the tenancy.
Who will run the schemes?
The Regulations allow commercial providers to administer tenancy deposit schemes, as long as they are fit and proper to do so, and they must meet all the conditions contained in the Regulations.
Will an English provider be approved to run a scheme?
Yes, all approved providers would have had to show that they meet the conditions set out in The Tenancy Deposit Scheme Regulations (Northern Ireland) 2012, before they can be approved.
How many schemes will there be?
There are three organisations including my|deposits Northern Ireland who are approved to run tenancy deposit schemes in Northern Ireland. All three organisations are authorised to run both custodial and insurance based schemes.
Will there be a choice of scheme?
You will be able to choose which scheme or schemes you protect deposits with. You may participate in more than one scheme at a time, although an individual deposit can only be submitted to one scheme at a time.
Who will be able to use the schemes?
Every approved scheme should be available to landlords and agents who are required to comply with tenancy deposit schemes regulations. my|deposits Northern Ireland will allow all landlords and agents to protect deposits as long as they fulfil our application criteria for the scheme they wish to use.
How will schemes be paid for?
Custodial scheme – deposits held by approved schemes will earn interest, which will be used to pay the schemes running costs. Every scheme must be able to demonstrate a robust financial model that would enable the scheme to be implemented and operate without the need for subsidy by the tax payer, even during periods where interest rates are low.
Insurance-based scheme – members can be charged a membership fee to join the scheme and will be charged a fee for each deposit they protect.
How will schemes be monitored?
Every approved scheme will be subject to regular performance reporting on an annual basis to the Department for Social Development. This includes a requirement to report on the financial position of the scheme, including the provision of a set of independently audited accounts and statements on the income and expenditure of the scheme.
Will schemes have any control over the amount that I can take as a deposit?
When will I need to comply with the regulations?
All deposits received after 1st April 2013 must be protected with an approved scheme within 14 days of receipt, and the Prescribed Information provided to tenants within 28 days of receiving the deposit.
For example - Deposit received and tenancy began on 1st May 2013. The landlord must protect deposit by 14th May 2013 and provide the Prescribed Information by 28th May 2013.
When should I provide information to my tenants?
The Prescribed Information must be provided within 28 days of the receipt of the deposit.
What is a tenancy deposit?
A tenancy deposit is a sum of money which a landlord may require a tenant to pay at the outset of the tenancy, and which will normally be returned to the tenant at the end of the tenancy. The landlord holds the money as security against the tenant not meeting their obligations in connection with a tenancy . In certain circumstances it may be retained by the landlord at the end of the tenancy, for example if it is needed to pay for:
- damage a tenant may cause to the property
- cleaning bills if the property has been left in poor condition
- bills that are left unpaid, for example fuel or telephone bills
- any unpaid rent.
A written guarantee, as often used by deposit guarantee schemes, is not a sum of money and as such is not covered by tenancy deposit regulations.
Do I have to take a deposit?
No. You are not obliged to take a deposit. If you do, the deposit must be dealt with in accordance with an approved tenancy deposit scheme.
Am I responsible for protecting deposits with a scheme?
Yes. As noted in Section 1, the Regulations place a duty on landlords to ensure that tenancy deposits are protected with an approved scheme; to provide information to the tenant, and ensure that deposits are protected by an approved scheme throughout the tenancy.
If you use a letting agent to manage the tenancy, it will be in your interests to ensure that they meet this requirement.
How will the scheme protect deposits?
Custodial scheme - on receipt of a deposit, the scheme will hold the deposit in a designated account, until the deposit is due to be repaid after the end of the tenancy.
Schemes must provide adequate protection for deposits, enable individual tenants and deposits to be identified and ensure that money is always available to repay deposits, if required.
Insurance-based scheme – you will hold the deposit throughout the tenancy but you must provide the disputed deposit amount to the scheme if a tenant raises a dispute at the end of the tenancy. The scheme purchases insurance to cover any failure by the landlord or agent to submit the disputed deposit amount.
Can deposits be transferred from one scheme to another?
Yes. You can arrange to transfer the protection by contacting the scheme you currently use to protect the deposit.
What happens to the deposit if I sell a property part way through the tenancy with the tenant still resident?
Custodial scheme - If the property is sold, the scheme will continue to hold the deposit until it falls to be repaid. Approved schemes will need to ensure that they are able to identify the new landlord. The outgoing landlord or Agent should advise the Scheme of the change in ownership.
Insurance-based scheme – the scheme must be informed of the change in ownership. The scheme will then inform you of your responsibilities with regards to the protection.
Does a holding deposit have to be protected by a scheme?
No. A deposit for the purposes of the Regulations is a sum of money held as security against the tenant not meeting their obligations in connection with a tenancy agreement. This is not the case with a holding deposit. However, if you receive a holding deposit for someone who then becomes your tenant, and the holding deposit then becomes the tenancy deposit, you must protect the deposit with an approved scheme.
What happens if the property is let to several tenants on one tenancy agreement?
The treatment of joint tenants will be determined by the rules of individual scheme providers. my|deposits Northern Ireland allow landlords to nominate a lead tenant who will have responsibility for the deposit protection.
How will deposits be returned at the end of a tenancy?
Custodial scheme: the default position is that you apply to the scheme for repayment of the deposit after the end of the tenancy. The scheme will then write to the tenant asking them to confirm whether they agree with your release request, or whether they wish to dispute the amount. The tenant can apply to the scheme for repayment of the deposit. The scheme will then write to you explaining the amount applied for. If you agree the scheme will repay the deposit within 5 working days. If you do not agree with the tenant's application, or do not make an alternative application within 30 working days, the full deposit is repaid to the tenant.
Insurance-based scheme – the Regulations state that you should repay the tenant the amount of the deposit as agreed within 5 working days of the tenant’s request for the return of the deposit. If you do not agree at first you should attempt to negotiate the amount of the deposit you return to the tenant.
How long will it take to return the deposit?Custodial scheme - Where the tenant agrees with your application, the deposit will be repaid within 5 working days. The return of deposits may take longer where the amount is disputed, or you or the tenant cannot be contacted, or do not cooperate.Insurance-based scheme – it is your responsibility to return the deposit in accordance with your agreement with the tenant.
What if the tenant is un-contactable?
Custodial scheme - on receipt of your application, the scheme will write to the tenant asking whether they agree, or wish to dispute the amount. If no confirmation is received within 30 working days, the scheme will repay any amount claimed by you at the end of the 30 working day period after contacting the tenant. Any amount due to the tenant will be held by the scheme in case it is applied for later.
Insurance-based scheme – if you cannot contact your tenant please make all reasonable efforts to do so and keep evidence. The tenant has three months from the date they vacate the property to raise a deposit dispute. If you are an agent we recommend you hold onto the deposit for a few extra days after the three months as we need to check whether to accept the deposit dispute raised by a tenant on the three month deadline.
What happens to the deposit if the tenant fails to pay the last month's rent or the final utility bill?The dispute resolution process can only deal with disputes over withheld deposits. If the landlord wishes to make a claim on any of the deposit, they should specify the amount they wish to claim:Custodial scheme - the scheme will then write to the tenant to notify them of the application and to ask them to confirm whether they agree with the application or whether they dispute the amount.Insurance-based scheme – the landlord will have to set out the reasons for any deductions and then it is up to the tenant whether they decide to raise a deposit dispute with the scheme.If there is clear evidence of rent arrears or money owing on utility bills then we may not accept the tenant’s deposit dispute. Each case will be decided on its own merits though and our decision in one case will not influence that in another.
Will interest be returned with the deposit?
Interest earned on the deposits paid in to and held by an approved scheme will not be repaid to landlords or tenants.
What happens if the tenant disagrees with the amount of the deposit I intend to return?
Every approved tenancy deposit scheme will be required to provide access to a dispute resolution service. This means that where a tenant does not agree with the amount of deposit to be returned by you at the end of the tenancy, the tenant can ask for the case to be referred to the Scheme’s Dispute Resolution Mechanism.
If the deposit dispute is accepted by the Scheme then both parties will submit evidence and an adjudicator will make a decision about how the deposit should be repaid.
my|deposits Northern Ireland will not accept a deposit dispute unless the tenant provides evidence that he has tried to resolve the dispute with you first.
Does the tenant have to use dispute resolution?
No. Tenants can still opt to go to court.
Custodial scheme – if there is a dispute and the tenant informs us they want the matter dealt with at court we will pay the entire deposit back to you.
Insurance-based scheme – if the tenant raises a deposit dispute but opts to go to court you will have to pay the disputed amount into the scheme and we will then repay the deposit amount in accordance with a court order received. If the tenant does not issue court proceedings within 6 months of opting to go to court we will repay the amount back to you.
How is a dispute raised?
Custodial scheme - if the tenant does not agree with your application for the return of the deposit, they must notify the scheme of the amount which they think should be repaid, and request a referral to our dispute resolution mechanism. If accepted the disputed amount will be held in a designated account until the issue is resolved at adjudication - any undisputed deposit will be returned to the tenant as soon as possible.
Insurance-based scheme – if after negotiation the tenant does not agree with the return of the deposit then they can raise a dispute with us within three months of leaving the property. We will assess the dispute and if it is accepted send you a notification stating how much is in dispute and provide you with access to the tenant’s reasons for raising the dispute and his evidence.
How much will dispute resolution cost me?
Use of the dispute resolution service will be free for tenants and landlords.
Will I have to provide evidence to support a dispute?
Yes. Both you and your tenant will be asked to provide evidence to support your claims on the deposit. The types of evidence that will be accepted are not defined in the Regulations. Please see our ADR Guides for further information.
Will the Regulations require me to provide an inventory, check in and check out reports?
You are required to provide an inventory with your tenancy agreement. It is recognised as good practice to also complete a detailed check in report at the outset of the tenancy, and a check out when the tenancy ends. If the tenant has agreed the inventory, check in and check out then this greatly reduces the potential for a dispute to arise.
Will the adjudicator consider a dispute without an inventory and check in/out reports?
The inventory and check in report are vital evidence for the adjudicator to consider the condition of the property when the tenant moves in. The check out report will state the condition of the property at the end and any deductions to the deposit should made in conjunction with the findings of the check out.
If there isn't an inventory or check in/out reports the adjudicator may still decide how a deposit should be allocated between tenant and landlord, based on the other available evidence. Failure to provide suitable evidence in support of a claim will affect the outcome of the dispute.
Will the adjudicator deal with disputes where I need to recover more than the amount of the deposit?No. Tenancy deposit schemes will only deal with the deposit that has been paid by the tenant. You would need to recover additional sums by other means e.g. through the courts.
How long does the dispute resolution process take?
The adjudicator must decide any dispute within 20 working days of receiving the evidence.
Within 5 working days of reaching a decision, the adjudicator must write to the scheme, the tenant and landlord, setting out the detail of the decision.
Both the landlord and tenant will have 10 working days to request a review of the adjudication decision if they believe that the adjudicator has made an error in fact or law. The scheme will decide whether to submit the matter to a review adjudicator based on the parties submissions.
What if I need the deposit to pay for repairs?
Where a dispute is raised over the amount of deposit applied for by a landlord at the end of the tenancy, the deposit cannot be returned until the dispute is resolved or the tenant and landlord otherwise reach agreement or agree to abandon the adjudication process. Any part of the deposit that isn't disputed must be returned as soon as possible.
How long does it take to receive the deposit once the adjudication has been made?
The deposit must be returned by the scheme within 5 working days of the resolution of the matter being:
- After 10 working days have elapsed following the notification of the original decision (where no review is requested).
- Of the parties being informed a review request has been rejected.
- Of the notification of a review adjudication.
What happens if the tenant is not provided with the required information?
The same process applies as for the failure to submit a deposit to an approved scheme. If a deposit is not protected and the required information is not provided to the tenant within the required timescale, the landlord may face a fixed sum penalty as ordered by the local council.
What happens if the deposit is not submitted to an approved scheme?
If a deposit is not protected with an approved scheme within the required timescale, the landlord may face a fixed sum penalty as ordered by the local council.