There has been many various theories on this matter and I would like to clarify what landlords are legally allowed to do with a tenants deposit.
Okay so you may have had a tenant move into your property and you've got taken a bond/deposit in case they damage the property or cause you to produce other costs (Non payment of hire etc.)
Previously landlords could hold the deposit themselves and take money ought to the tenant give them reason to do so. However a number of rogue landlords took advantage of this and would keep the tenants deposit with out reason, this instigated the federal government to introduce the tenancy deposit safety scheme.
The concept behind this scheme is that the money taken from the tenant as a deposit could be taken by the owner or agent and despatched to the government custodial scheme. This basically meant that the deposit was no longer in the landlords hands. Any disputes with owed money to the owner would have to be taken up with the custodial deposit scheme.
Okay so this sounds truthful but from a landlords perspective, this has its drawbacks! If there's cash owed, the dispute can take a long time and may lead to you battling to get what's fairly owed to you.
The scheme could be very much in favour of the tenant and will a tenant go lacking with owed money, a landlord has a hard time convincing the custodial scheme that you simply no longer have any contact with the tenant.
The reason for that is that the government scheme needs the tenant to confirm launch of the held monies to the landlord.
So you ask...............can I get around this........the reply is YES!
You MUST beneath all cases have the deposit registered in the government scheme however you don't necessarily must send the money for custodial holding.
An organization called mydeposits lets you hold the cash your self but will INSURE IT under the federal government scheme. Which means they are going to provide you and your tenant with a certificate. Ought to there be a dispute they will act as the intermediary.
There's a charge for this service but it is not a lot, and for my part is the wantred choice for many landlords.
Letting agents who manage or let your property could try and take your Deposit protection schemes
into the custodial scheme. You might be able to request that you will hold and insure the deposit for them under your personal insured scheme.
Hope that is of some help! Happy Letting
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