TENANCY DEPOSIT PROTECTION becomes law in April 2007. From that date, all landlords, operating assured shorthold tenancy agreements (ASTs), and who take and hold a deposit from their tenants, must protect this deposit in the event that they do not return all or part of it to the tenant at the end of the tenancy agreement. They can do this by either lodging the deposit in a Custodial Scheme or continue to hold the deposit by joining an Insurance-Based Scheme.

In summary, one aspect of the Housing Act 2004 regulation, from 7th April 2007, is to impose on all Private Rented Housing Sector (PRS) landlords (operating AST agreements) within England and Wales who take and hold a deposit from their tenants, the responsibility to ‘protect' this deposit in the event that they do not return all or part of it to the tenant at the end of the tenancy agreement.

From this date, Private Landlords will, in essence, have three options open to them:

• Stop taking a deposit from tenants
• Lodge the whole deposit with the default Custodial Scheme at the start of the tenancy
• Join an Insurance-Based Deposit Scheme for the right to continue to hold the deposit themselves. They will have to pay a fee to the scheme in order to obtain this ‘protection' for each deposit held by them.

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