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Tenancy Deposit Scheme
From the 6th April 2007, all deposits taken from Assured Shorthold Tenancies (AST) in England and Wales must be protected by a tenancy deposit scheme. Landlords should not take a deposit unless it is through this scheme. There are two types of tenancy deposit scheme: a single custodial scheme and two insurance based schemes.
Custodial Scheme:
- The tenant pay the deposit to the landlord
- The landlord then pays the amount of deposit into the scheme
- Within 14 days of receiving the deposit, the landlord must give the tenant the prescribed information about the scheme being used.
- At the end of the tenancy, if the landlord and tenant agree how the deposit should be divided, they will tell the scheme which returns the deposit, divided in the way agreed by both parties
- If there is a dispute, the scheme will hold the amount until the disputer resolution service or courts decide the dispute
- The interest accrued by deposits in the scheme will be used to pay for the running of the scheme and any surplus will be paid on the amount refunded
Insurance Based Scheme:
- The tenant pays the deposit to the landlord
- The landlord retains the deposit and pays a premium to the insurer - this is the key difference between the custodial and insurance schemes.
- Within 14 days of receiving a deposit, the landlord must give the tenant prescribed information about the scheme being used and the tenancy.
- At the end of the tenancy, if the landlord and tenant agree how the deposit should be divided, the landlord returns all or some of the deposit
- If there is a dispute, the landlord must hand over the disputed amount to the scheme for safekeeping until the dispute is resolved
- If for any reason the landlords fails to comply, the insurance arrangements will ensure the return of the deposit to the tenant if they are entitled to it
Whichever scheme is used, the deposit must be returned within 10 days of the tenant and landlord agreeing how the deposit is to be split or 10 days following notification of a court decision.
How can I claim rental expenses if my property is empty?
When you first begin to run a rental business, you are able to claim expenses that you have incurred, up to 7 years previously, against the rental income.
If the property is a furnished holiday let, you can offset the loss against your other income. There are strict rules that govern the definition of such property however and before claiming this you should seek professional advice.
If the property is not furnished holiday accommodation, you are unable to set off the loss in this manner. All you can do is carry the loss forward to set off against future rental profits. Once again, seek professional help here to ensure you claim all the expenses you are entitled to.
If you have any queries regarding the above, please feel free to contact us either by calling 020 7357 7059 or emailing us at info@maximproperty.co.uk
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