Martin & Co renews calls for single, custodial deposit scheme

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03rd November 2011

Martin & Co renews calls for single, custodial deposit scheme

Lettings chain Martin & Co has again added its voice to a call for a single tenant deposit scheme – a custodial one.

Ian Wilson, managing director of the 60-branch franchise business, first made the call in April 2009. Today, it is repeated by the firm.

In Wilson's original call, he hit out at the Government’s failure to go further in legislation covering the security of tenants’ deposits. He said then that there is “huge opportunity for abuse”.

The firm at around that time had to strip some of its own franchisees of their licences after deposits were misappropriated, but it has since cracked down hard on compliance.

The firm has spoken out again after a LAT ‘think piece’. See the link at the end.

But what Wilson said two and a half years ago has changed little as far as his firm is concerned

He said then that many landlords and agencies were still holding deposit monies themselves and not complying with the regulations.

He said both the custodial and insurance-backed schemes permitted by the Government had major flaws in that they allow the landlord or agent to handle the money directly – allowing them to misappropriate it.

He said: “The tenant may not know of their loss until they try to recoup their deposit at the end of the tenancy. Many tenants still remain unaware of the landlord’s obligation to provide written confirmation of the scheme being used.”

He added: “Be it deliberate negligence or unwitting ignorance, landlords or their agents who do not lodge deposits properly and adhere to the rules are not only jeopardising tenants’ money, but they are also exposing the landlord to harsh penalties which can devastate their return on investment.

“This remains most unsatisfactory, as there is still a huge opportunity for abuse.

“The obvious solution is to clarify the rules and streamline them into one, well-publicised process via a single scheme – and ideally one where the tenant can lodge their monies directly into a custodial account without any monies passing through the hands of the landlord or letting agent.

“In this way, there would be no missing money, no confusion as to how the scheme operates, no mystery about where the money will be held, no threat of an agent or landlord going under and taking the deposit with him, no more court action for non-protection of monies, no hassle of late deposits, and no shady third party bank accounts.

“Indeed, the Government’s original statement that tenants could sleep well at night knowing that their deposit monies are safe would then be accurate.”

Two and a half years on, Martin & Co stands by all it said then.