As part of the TDS Covid-19 series, we’re taking questions from landlords, letting agents and tenants on their concerns surrounding tenancy deposit protection during the coronavirus pandemic.
With lock-down and social distancing placing many restrictions on normal practices in the tenancy process, our experts are helping to shed light on how this could impact deposits and disputes – and what you can do to protect yourself.
In this week’s #AskTDS, we answer a question from a landlord who is planning on reducing their tenant’s rent for a temporary period during this difficult time without deferring the shortfall to later in the tenancy. Instead, the landlord will be absorbing the reduction themselves.
With the deposit calculated on monthly rental, the landlord is concerned about the deposit cap legislation, which was introduced in June last year, and how the temporary change in rent could be perceived as a breach.
A recap on deposit cap
The deposit cap legislation in England states that the deposit must be capped at five weeks of the rental amount (or six weeks if the annual rent is £50,000 or more).
The Tenant Fees Act sets out that the deposit cap is based on the value of rent at the time of the tenancy’s grant, renewal or continuance, which means that any rent reduction made after the tenancy agreement has been signed would not impact on the deposit amount.
However, if a new or renewed tenancy is agreed with a lower rent value, the deposit amount would need to be reduced accordingly in accordance with the deposit cap.
Further information can be found at www.depositcap.com.
The importance of keeping tenancy records
TDS recommends that the landlord keeps a comprehensive record of why the reduction in rent is being offered and for how long. Ideally, the landlord would seek agreement from the tenant that they will not pursue a claim, regarding the deposit amount, on acceptance of the rent reduction offer.
Maintaining a clear audit trial of all communications and adjustments made during Covid-19 is paramount to avoid any confusion or exploitation by all parties.
TDS Covid-19 FAQs
If you would like to know more about how to manage tenancy deposit protection lawfully during Covid-19, please visit the TDS Covid-19 FAQs page .
NRLA: If you are a landlord and would like to keep up to date with any changes that may affect you or your responsibilities, you can receive 25% off your first year’s membership when joining here.
Tenancy Deposit Scheme (TDS) is a Government-approved scheme for the protection of tenancy deposits; TDS offers both Insured and Custodial protection and also provides fair adjudication for disputes that arise over the tenancy deposits that we protect.
We provide invaluable training in tenancy deposit protection and disputes for agents and landlords through the TDS Academy as well as joining with MOL to provide the Technical Award in Residential Tenancy Deposits.
TDS can only comment on the process for our scheme, other deposit protection schemes may have a different process/require different steps. Content is correct at the time of writing.
These views are those of the author alone and do not necessarily reflect the view of TDS, its officers and employees.