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Should I retreive tenant deposit ?


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A couple of queries:

1) I am buying a house with tenants already in -who have paid their deposit to Letting agent who apparently has this deposited in a scheme, should I re-claim that deposit and deposit it myself when I become new owner?

or leave it protected with agent?

(The vendor whom I'm buying the house from owns the estate agency and Letting agency its currently managed with -I won't be taking on the management and will manage it myself).

2) A LA has at long last found me a tenant for another property of mine -they also state in their literarture that they can hold on to deposit of tenant at no extra charge. Should I let LA keep it or ask that deposit sent to me so I can protect it?

Again I'm not using the agent for management -just for tenant find only.

Any advice would be appreciated.

Which deposit schemes are free? as I don't own that many prop's to make it worthwhile keeping it myself after fees paid. I guess theres no verdict on which is better....

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Hi CH1,

You need to find out what scheme the LA is protecting your deposit in. If they are using TDS (which is the scheme backed by the National Landlords Association) then they can protect the deposit (by buying the insurance certificate) and they can specify that the deposit is actually held by the landlord (and not the agent) on the policy document.

If the agent is ARLA registered then it is almost certain that they are using the ARLA scheme - and I think that only covers deposits held by the LAs themselves.

Your other option is to deposit the scheme in the custodial scheme - this is free for you to use.

The reason why the agent wants to hold onto the deposit "free of charge" is so that they can 1) earn the interest on it and 2) keep track of when your tenants leave (because they can then offer to find you another tenant). In other words they will hear that your tenant is proposing to leave before you even think about instructing a different agent !

What would I do ? I would get the deposits back from the LAs and I would put them into the custodial scheme. This gives me, rather than the LA control.

Good luck,


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Thanks Mark.

You are right that the LA that I've used to find a tenant is more biased towards protecting the deposit themselves.

He warrned me its taking months to get money back from the custodial scheme TDS, is this true I wonder?

I've never used one. The agent uses a deposit scheme called disputes service whereby they physically hold on to the money.

Agent says if I want the deposit myself then I have to register first with TDS and then he'll transfer it to me, is this correct?

I'm undecided what to do.

Regarding the other property I complete on today I don't think the vendor is bothered either way -so I'll take that deposit myself and protect it.

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If nothing else it's got to be better to have it all in your name, i'd want the deposit.

So your options are

TDS free but no protection for you, the way I think of this is the money is actually gone and you'll never see it or benefit from it.

1. T leaves on good terms they get the money back - fair enough.

2. T leaves on bad terms and no one gets the money.


Use an insurance based deposit scheme and you have to pay, pay to set up and pay to insure the money, this is probably the better scheme but I'd only consider it if I had more properties or you pass the cost to the T which is probably too late for you now.

However, you'll get plenty of good knowledge replying with their pros and cons.



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personally i would bite the bullet and keep the dep in cash....pass the cost to T if you can ...it is a one off joining fee of £59 ( i think ...dont think that is an annual charge ?)

I have good reason to do this as actually physically holding the cash makes the dispute a whole lot easier to deal with ....especially when people do a runner b4 term is up ....you try wasting your time trying to get TDS to pay out to you .....have as already posted avoided wasting a lot of time on this already ......

Also if you have a few props dep amts can be sizable and as an avid investor i use the dep to make lots more !!!get creative ....

I charge all T a set up fee of £75 (30 to insure dep 25 ref and 20 admin for check in check out time ) i do not break it down like this for a T unless i have to ......

But this charge barely covers the actual cost of change overs......

As new rules are introduced like energy certs , electrical certs ...the cost will be passed onto the T .....after all these new rules are all for the benefit of the T ...so the T will be paying ....NOT ME !!!!!!!!!!

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Thanks. The insurance backed scheme sounds better, although I don't think I could pass the costs down to tenant on this occasion as they must have already paid a fee to the Letting Agent they've come through that I've used for Find a Tenant only.

Does it mean with the insurance backed schemes you the Landlord physically hold onto the deposit in your own bank?

At the moment I will only have one deposit (£700) I could protect in this manner from above property from a tenant found through LA.

1) Regarding the already tenanted property with students unfortunately I didn't complete on Friday as there's an equitable charge registered against the property which wasn't cleared in time, so if it clears in next 24hrs may complete. Don't know the implications of this delay...

If I do buy that property then I will have a further 3 'student' deposits to retrieve from management company and protect, total though as 3 students are named on one AST not sure whether it'd be classed as one total deposit or 3 individual ones..?

Would it be worth joining the insurance based scheme just for one property currently (though may have another couple in future)

So far the choices and costs seem to be:

1) http://www.mydeposits.co.uk/landlords/cost.aspx

Costs = £58.75 to join + £30 per deposit + £14.70annual renewal= so that's be £88.75 upfront initial cost

2) http://www.depositprotection.com/

The custodial DPS scheme -free

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