Tenancy Deposit Protection

You are here:

06th December 2011

Tenancy Deposit Protection

extract from Sue Hopson's Blog - Martin & Co UK's brand standards director

I strongly believe that a custodial-only scheme is the future for tenancy deposit protection. It’s great the industry is starting to recognise the need for some sort of change with regard to deposits and even better with current debates. We ourselves called for a single tenancy deposit scheme back in April 2009.

Why? Partly because the deposit legislation has to be policed by the tenant but they are the ones most likely to have the least knowledge about lettings. It is interesting that Scotland, having had access to the results of legislation already in place in England and Wales, has decided to introduce custodial schemes only. Has it picked the best parts of the current England and Wales legislation? Has it also seen the problems that come when introducing legislation with different playing fields?

The custodial scheme is the near perfect model, in my view.

The tenant will pay the money to the agent or landlord who in turn will then have to lodge the money with the custodial scheme.

Prior to sending the money, the agent or landlord will register the deposit online so that the money has a place to match to upon receipt. Unless the tenant knows how the legislation works, they may not know that they should receive confirmation from the scheme that the money has been received. However, the custodial scheme does write to tenants to inform them if the money has not been received to match the registration within the 14-day timescale.

This gives the tenant the heads up and he or she can then start action against the landlord if necessary. Those who know little about the schemes will not realise that their deposits are possibly not in the correct hands.

So what if the agent or landlord does not register the deposit online in the first place? The custodial scheme is none the wiser and the tenant may also be oblivious to there being a breach of legislation and potential problems waiting for them at the end of the tenancy.

Martin & Co have always said cutting out the middle man is the obvious solution. Back in April 2009 we felt there were benefits for a single tenancy deposit scheme. Two years on this still seems to be the best option, and it is what Martin & Co has always urged the Government to look at.