Return of tenancy deposits from insurance schemes

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

This content applies to England

Introduction

Where a tenancy 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 the deposit or any part of it that is owed. 

If the landlord and tenant agree on the amount of the deposit to be returned to each at the end of the tenancy, the landlord should simply repay that amount to the tenant.

Notification of dispute to scheme administrator

If a tenant feels that an amount of the deposit is due to them, but has not received it from the landlord within 10 days of requesting it, the tenant should notify the scheme administrator.[1] When giving notice, the tenant must indicate if they consent 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 them to indicate if they accept that the whole or part of the deposit is due to the tenant and, if so, how much they believe should be repaid, and whether they consent 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 they agree to use the dispute resolution service, their consent to use the dispute resolution service is treated as having been given.[6]

If the landlord does not respond to the notice, and the scheme administrator is satisfied that they received it, it will be assumed that the landlord disputes the amount claimed by the tenant, and that they consent to the use of the dispute resolution service to resolve the dispute.[7]

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

  • the landlord and tenant agreeing on the amount to be received by each

  • using the scheme's dispute resolution service

  • by the courts, in which case the court's decision must be final (there must be no appeal outstanding and the period for bringing an appeal must have expired) before any amount can be 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 it is less than the 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 when directed to do so.[11]

If a landlord does not pay when directed to do so, the scheme administrator can terminate the landlord's membership of the scheme.[12] For more information, see Termination under insurance schemes.

Absent or uncooperative landlord or tenant

If a deposit is protected under an insurance scheme, and the landlord is absent or uncooperative, the tenant will have to apply to the courts for an 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. For more information, see Termination under insurance schemes.

If the tenant is absent or uncooperative, then the landlord can simply retain the deposit money.

Last updated: 18 March 2021

Footnotes

  • [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.