Dear Property Doctor,

I’m a new landlord and I’ve just finished renovating my first BTL in Brighton so that I can let it out. Can you tell me what I need to do with my tenant’s deposits? I’ve read stuff about deposit schemes, but a mate of mine reckons that I can still keep them – is he right – is this true?

New legislation came in in April 2007 that was aimed to prevent certain unscrupulous landlords keeping tenants deposits. Landlords must now safeguarded by one of three Government approved schemes. Landlords can choose which scheme they wish to use and must safeguard each deposit and inform the tenant which scheme has been used within 14 days of receiving the deposit. The Government has awarded contracts to three companies to run its tenancy deposit schemes.

There are 4 main options

1. Take no deposit – obviously this gets around the legislation

2. The Deposit Protection Scheme (DPS) – this is managed by computershare and is provided free of charge

3. The Tenancy Deposit Scheme (TDS) – this is an insurance backed deposit scheme. This allows landlords to hold onto deposits. (A premium is payable and deposits must be registered in 14 days)