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Insurance schemes

This content applies to England

Return of the deposit under an insurance scheme, and potential disputes, including in cases of absent or uncooperative landlord or tenant.

Where the deposit is retained under an insurance scheme, and the landlord does not return the deposit to the tenant at the end of the tenancy, the tenant must request that the landlord repay her/him the deposit, or any part of it that s/he feels is owed to her/him. If the landlord and tenant agree on the amount of the deposit to be returned to each at the end of the tenancy, then the landlord should simply repay the amount to the tenant.

Notification of dispute to scheme administrator

If a tenant feels that an amount of the deposit is due to her/him, but s/he has not received it from the landlord within 10 days of requesting it, the tenant should notify the scheme administrator.[1] When giving such notice, the tenant must indicate whether s/he consents to any dispute being resolved by the scheme's dispute resolution service.[2]

On receiving such a notification, the scheme administrator must direct the landlord to pay the disputed amount into a designated account held by it.[3] The notice sent to the landlord should ask her/him to indicate whether s/he accepts that the whole or part of outstanding amount is due to the tenant (and, if so, how much s/he believes should be repaid) and whether s/he consents to the use of the scheme's dispute resolution procedure to resolve any dispute.[4] The landlord has 10 working days, from the day on which the notice is sent, to respond to the notice.[5] If the landlord disputes the amount, but does not indicate whether s/he agrees to use the dispute resolution service, his/her consent to use the dispute resolution service will be treated as having been given.[6] If the landlord does not respond to the notice, and the scheme administrator is satisfied that s/he received it, it will be assumed that s/he disputes the amount claimed by the tenant and that s/he consents to the use of the dispute resolution service to resolve the dispute.[7]

The respective amounts due to the landlord and tenant may then be settled:[8]

  • by the landlord and tenant agreeing on the amount to be received by each, or
  • using the scheme's dispute resolution service, or
  • by the courts, in which case the court's decision must be final (ie there must be no appeal outstanding and the period for bringing an appeal must have expired) before any amount is repaid.

If the amount held by the scheme exceeds the amount due to the tenant after the resolution of the dispute, the balance must be repaid to the landlord.[9] If is less than , amount due, the scheme must direct the landlord to pay the balance to the scheme within 10 days. The scheme administrator must then repay that amount to the tenant within a further 10 days.[10]

The scheme must have in place adequate insurance to cover failures of landlords to pay an amount to the scheme director when directed to do so.[11]

If a landlord fails to pay when directed to do so, the scheme administrator can terminate the landlord's membership of the scheme and/or cease to retain any further deposits retained by the landlord under the scheme.[12] For more details, please see the page on Termination under insurance schemes.

Insurance schemes must make provision to prevent double recovery (ie recovery of all or part of the deposit from both the landlord and the scheme), and to recover from the tenant any amount incorrectly paid to her/him.[13]

Absent or uncooperative landlord or tenant

If a deposit is retained under an insurance scheme, and the landlord is absent or uncooperative, the tenant will have to apply to the courts for a court order that the outstanding amount, or part of it, is payable to the tenant. The tenant will then need to inform the scheme as soon as possible of the court order and the scheme should then pay the tenant the appropriate amount. The scheme will then have to pursue the landlord for this payment, or claim it from its insurance. The scheme administrator can also terminate the landlord's membership of the scheme (see the page on Termination under insurance schemes for more information).

If the tenant is absent or uncooperative, then the landlord can simply retain the deposit money (unless the tenant requests repayment of the deposit, in which case the tenant's request will need to be dealt with as above).

Wales

The legislative references and the footnotes on this page reflect the law in England. In Wales, very similar rules made under Welsh legislation apply, but the references may be different. Visit Shelter Cymru for more details about the law in Wales.

[1] para 6(2), Sch.10 Housing Act 2004.

[2] para 6(2A), Sch.10 Housing Act 2004, as inserted by art.6 Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

[3] para 6(3), Sch.10 Housing Act 2004.

[4] para 6A(2), Sch.10 Housing Act 2004, as inserted by art.7 Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

[5] para 6A(2), Sch.10 Housing Act 2004, as inserted by art.7 Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

[6] para 6A(4), Sch.10 Housing Act 2004, as inserted by art.7 Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

[7] para 6A(3), Sch.10 Housing Act 2004, as inserted by art.7 Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

[8] para 6(4), Sch.10 Housing Act 2004.

[9] para 6(6), Sch 10 Housing Act 2004.

[10] para 6(7) and 6(8), Sch.10 Housing Act 2004.

[11] para 5(3), Sch.10 Housing Act 2004.

[12] para 5(4), Sch.10 Housing Act 2004.

[13] para 8, Sch.10 Housing Act 2004.

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