When it comes to renting a property, one of the most important things that both landlords and tenants need to be aware of is the tenancy deposit scheme. This is a government-backed initiative designed to protect both parties against disputes over deposits. In this article, we’ll take a closer look at the tenancy deposit scheme and how it relates to rolling contracts.

What is a tenancy deposit scheme?

A tenancy deposit scheme is a legal requirement for all landlords who rent out their properties on an assured shorthold tenancy agreement. The scheme is designed to protect tenants’ deposits, ensuring that they are returned promptly and fairly at the end of the tenancy.

There are two types of tenancy deposit scheme:

1. Custodial scheme – the deposit is held by an independent third party throughout the tenancy.

2. Insurance-based scheme – the landlord retains the deposit but pays a fee to an independent third party to provide insurance should they need to make a claim at the end of the tenancy.

Both types of scheme are designed to provide a fair and impartial way of dealing with deposit disputes, should they arise.

What is a rolling contract?

A rolling contract is a type of tenancy agreement that automatically renews itself at the end of the fixed term. Rather than signing a new agreement, the tenancy simply continues on a month-to-month basis until one party decides to end it.

How does the tenancy deposit scheme affect rolling contracts?

If you are a landlord and your tenant is on a rolling contract, you must continue to protect their deposit in a tenancy deposit scheme. Failure to do so could result in legal action being taken against you, and you could be ordered to pay compensation to the tenant.

It’s important to note that the deposit protection rules apply even if the original tenancy agreement has expired. So, if your tenant has been on a rolling contract for several months, but you failed to protect their deposit at the start of the tenancy, you could still face legal action and a compensation claim.

In conclusion, if you are a landlord with a tenant on a rolling contract, it’s essential to ensure that their deposit is protected in a tenancy deposit scheme. This will not only protect you from legal action but will also provide your tenant with peace of mind and ensure that any deposit disputes are dealt with fairly and impartially.