End of tenancy deposit protection under insurance schemes

A deposit can cease to be protected under an insurance scheme before the tenancy comes to an end when a landlord's membership of the scheme is terminated.

This content applies to England

Deposit stopped being protected 

A tenancy deposit may cease to be protected under an insurance scheme if:

  • the landlord gives the scheme administrator notice that they no longer wishes to use the scheme[1]

  • at the end of a tenancy, the landlord fails to pay amounts to the scheme when ordered to do so (this could be when there is a dispute over the amount withheld, or the amount outstanding after a final decision on the deposit), or fails to comply with other requirements specifically stated by the scheme to be necessary in order for continued protection[2]

If the scheme requires landlords to be members in order to benefit from protection, it can end membership of the scheme on the basis that the landlord is not complying with its internal rules.[3] If a landlord's membership of the scheme is terminated because they do not comply with a requirement of the scheme, this will not invalidate the protection of deposits protected in the scheme before termination of the membership.[4]

Scheme administrator's obligations on termination of membership

Where a deposit ceases to be protected under the scheme, the scheme administrator must follow a set procedure:

  • if the deposits are to cease to be retained under the scheme or the landlord's membership of the scheme is to be terminated because of a failure of the landlord to make a payment or satisfy a requirement of the scheme, the scheme administrator must serve notice on the landlord stating that the scheme administrator proposes to make such a determination and the reasons for doing so.[5] After 14 days, the scheme administrator must determine whether the deposit should cease to be retained and/or the landlord's membership of the scheme terminated.[6] This implies that if the landlord makes the payment within the 14 days, the scheme administrator has discretion to not terminate their membership or cease to retain the deposit under the scheme

  • the scheme administrator must determine the date on which the relevant deposit will cease to be retained under the scheme or the landlord's membership will be terminated.[7] This must not be less than three months after the landlord has served notice that they no longer wishes to use the scheme, or the scheme administrator has served notice on the landlord[8]

  • at least two months before[9] the landlord's membership of the scheme will be terminated and/or deposit will cease to be retained under the scheme, the scheme administrator should serve notice on the landlord and the tenant identifying the deposit in question; stating that this will happen and the date on which it will happen; and stating that the deposit will still need to be protected under a scheme[10]

Landlord's obligations when they change deposit protection scheme

If a deposit ceases to be protected under an insurance scheme, it must be protected in another scheme before the date on which it ceases to be protected under the previous scheme. The landlord or agent must then notify the tenant about the details of the new scheme, within 30 days of the deposit ceasing to be protected under the previous scheme.[11]

Last updated: 18 March 2021

Footnotes

  • [1]

    para 5(1A), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [2]

    para 5(3A), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [3]

    para 5(4), Sch.10 Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [4]

    para 5(4B), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [5]

    para 5(3B), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [6]

    para 5A(3)(a) and (5)(a), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [7]

    para 5A(2)(a), (3)(a), and (5)(a), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [8]

    para 5A(7), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [9]

    para 5A(8), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [10]

    para 5A(4) and (6), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.

  • [11]

    para 5A(9), Sch.10, Housing Act 2004, as amended by Housing (Tenancy Deposit Schemes) Order 2007 SI 2007/796.