Settling disputes over tenancy deposits

Karen Bright is a Partner and Head of the Litigation and Dispute Resolution teams at Bishop & Sewell.

The Tenancy Deposit Scheme (TDS) is a government approved tenancy deposit protection scheme in England and Wales operated by The Dispute Service Ltd. It was established in 2003 to provide tenants with a way of resolving deposit related disputes with landlords in a swifter, cheaper and therefore potentially less stressful manner than going to court, writes Karen Bright, a Partner and Head of Litigation at solicitors Bishop & Sewell.

Like the courts, TDS is independent and authoritative, however TDS can only resolve a dispute if the tenancy has ended, the deposit is registered with them, and the dispute is about the deposit. Both landlord and tenant must agree to alternative dispute resolution (ADR).

Reported here, Sandy Bastin, Head of Dispute Resolution at the TDS says, “The Housing Act 2004 requires landlords and letting agents to protect deposits on assured shorthold tenancies in a scheme such as ours. We provide both insurance-backed and custodial tenancy deposit protection with free, impartial dispute resolution for when disagreements arise over how the money is divided.”

Either the landlord or the tenant can decide to take their deposit dispute to court if they prefer this form of dispute resolution. This is because there may be other areas in dispute that do not relate to the deposit or the tenancy, for example, counterclaims by a tenant, complaints by a landlord against an agent or contractor due to their conduct, or disputes between landlords/tenants themselves. TDS is unable to consider these wider issues and therefore the dispute may be better taken to appropriate redress schemes or court, where all issues can be dealt with together.

If using their TDS Insured scheme, which is where the agent or landlord holds the deposit, at the end of the tenancy and prior to raising a dispute with TDS you obtain a Court Order, you will need to act upon the directions set out in the Court Order, without referral to TDS. Once the issue has been resolved by the Court it is important for the agent or landlord to then end the protection in their TDS Insured account.

If a party tells them after a dispute is raised with TDS, and the disputed deposit has been returned to them, that the dispute is being resolved through the courts, unless the Court refers the dispute back to the TDS or there is evidence that the proceedings have been discontinued, they will not be able to resolve the dispute. In this instance, they retain the disputed deposit until the Court informs them that the dispute has been resolved by the Court and the outcome of those proceedings.

At Bishop & Sewell, we have more than 40 years’ experience in property with a particular focus on Landlord & Tenant. If you are thinking of buying a leasehold property, or if you already own a leasehold property and you have a question about obtaining a consent to alterations that you are planning, please call 020 7631 4141 and ask for a member of the Property team, or email [email protected]

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