Tenancy Deposit Scheme for Northern Ireland

Tenancy Deposits from 1st April 2013 must be protected in a tenancy deposit scheme

What is a tenancy deposit?

A tenancy deposit is a sum of money which a landlord may ask a tenant to pay at the start of a tenancy. The landlord holds the money as security against the tenant not meeting their obligations in connection with a tenancy agreement. The tenancy agreement should set out the circumstances in which the deposit may be withheld by the landlord at the end of the tenancy.

What is a tenancy deposit scheme?

A tenancy deposit scheme is an independent third party scheme which has been approved by the Department for Social Development (DSD) to hold and protect tenant’s deposits until they need to be repaid at the end of the tenancy.

Why is The Tenancy Deposit Schemes Legislation being introduced?

There are many benefits to both the landlord and the tenant with the introduction of the tenancy deposit schemes legislation such as:

  • Tenancy deposits will be protected by an independent third party.This will prevent deposit from being unfairly withheld by landlords or letting agents at the end of the tenancy.
  • Quick repayment of deposits.Where a landlord and tenant agree about the return of the deposit the deposit must be returned within 5 working days.
  • Free access to an independent dispute resolution service.Every approved scheme will provide a free service to resolve disagreements over the return of deposits as an alternative to taking legal action through the courts.
  • Provision of information. Landlords must give the tenant key information about the tenancy, the deposit and the scheme that safeguards the deposit. Schemes will also provide information about the protection of deposits and their services to tenants and landlords.
  • Sanctions for non compliance.A tenant can report a landlord to the local council if they fail to submit deposits to an approved scheme and/or provide information to the tenant within the specified time limits. Councils will have the power to issue fixed penalties in these cases.
  • Improved professionalism of the private rented sector.The introduction of tenancy deposit schemes will raise standards in relation to management of deposits.

What are the different types of schemes?

There are two types of schemes which have been approved to operate in Northern Ireland, the custodial scheme and the Insurance scheme:

  • The Custodial scheme, which is free for both the landlord and tenant to use, is where all the deposit is handed over by the landlord to the scheme administrator for safe keeping in a designated account and either the tenant or the landlord can apply at the end of the tenancy for repayment of the deposit. In the event of a dispute the scheme administrator will hold on to the disputed amount until the dispute is resolved.
  • The Insurance scheme is where the Landlord holds on to the deposit and pays a fee and any contribution towards insurance to the scheme administrator. The Landlord refunds the deposit to the tenant when it is due to be refunded. In the case where there is a dispute, the landlord hands over to the scheme administrator the disputed amount to safeguard until the dispute is resolved.

When will the tenancy deposit schemes be available?

Any deposit taken on or after the 1 April 2013 in relation to a private tenancy has to be protected in an approved tenancy deposit scheme. Four organisations have been appointed as Scheme Administrators to operate tenancy deposit schemes in Northern Ireland. They are .

Information courtesy of Department of Social Development Northern Ireland

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