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Fake Tenancy Deposit Scheme

Landlords Should be Warned of Fake Tenancy Deposit Schemes

Landlords who take a tenant deposit will be aware of that since 6th April 2007 they need to use one of three government approved Tenancy Deposit Schemes (TDS); two insurance backed and one custodial scheme.

There is only one approved custodial scheme which requires a landlord to deposit the tenants deposit with the service to comply with the legislation. The custodial scheme is and is operated by The Deposit Protection Service (DPS).

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Since the tenancy deposit scheme was set up the Deposit Protection Scheme has protected over 645,000 deposits have been protected with them worth over £480 million.

Protected deposit ‘scam’

It has come to PropertyHawks attention that some websites have emerged that suggest that they will also be able to take tenant deposits from landlords in a way that complies with government legislation.

One such scheme is called ‘mytenancydeposit’ and encourages landlords to deposit funds with them. However this will not comply with the Tenancy Deposit Scheme and therefore has no benefit for the landlord or tenant.

In a recent statement the DPS stated that:

“MTD Secure Limited, trading as ‘’, does not operate a Government authorized scheme for the protection of tenants’ deposits within England and Wales.

Please be aware that any deposit secured with a business purporting to run a custodial scheme will not fulfil legal obligations under the Housing Act. Not protecting your deposit can lead to legal penalties and you maybe required to repay the deposit.

If you have already deposited funds with ‘,’ the DPS recommends you seek legal advice.”

Not protecting a tenant’s deposit – the legal implications.

Any landlord using this scheme or any other than the three government approved schemes would be liable to fines and penalties.

These are:

a) Unable to use ‘notice only’

Currently, a landlord can obtain an order for possession of an assured shorthold tenancy at any point after the first six months of the tenancy providing any fixed term has expired and the landlord gives the tenant at least two months’ written notice (Under Section 21 of the Housing Act 1988). This is known as ‘notice-only’.

However, under Tenancy Deposit Protection (TDS), the landlord is unable to regain possession of the property using the usual ‘notice only grounds’, if the deposit has not been safeguarded and the prescribed information passed onto the tenant within 14 days of the landlord receiving it.

b) Payment to the tenant

Tenants can apply for a court order requiring the deposit to be safeguarded or the prescribed information to be given to him about the scheme in which the deposit is safeguarded.

Where the court believes that the landlord has failed to comply with these requirements, or the deposit is not being held in an authorised scheme, the court must either order the landlord within 14 days of the making of the order to repay the deposit; or order the landlord to pay the deposit to the custodial scheme administrator.

The court must also order the landlord to pay to the tenant three times the deposit amount within 14 days of the making of the order.

Landlords warned

Landlords have been warned and we all need to be hyper vigilant against unapproved tenancy deposit schemes.

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