Tenancy Deposit Scheme to withdraw protection

Wednesday, 7 January 2009 3:34 PM

By Sarah Garrod

Tenants are being warned to check their landlords have safeguarded their deposits following an announcement today that the Tenancy Deposit Scheme will only be available to letting agents who are members of professional bodies.

Landlords and tenants who use the Tenancy Deposit Scheme have been told they have until April 6 to ensure they are protected by a regulated letting agent or government authorised deposit protection scheme.

Established under the Housing Act 2004, the Scheme necessitates landlords to register details of the start and end of all Assured Shorthold Tenancies, by way of protecting tenant deposits and ensuring their return at the end of tenancy.

At the insistence of their insurers, the Tenancy Deposit Scheme will now only provide deposit protection and alternative dispute resolution to letting agents who are members of recognised professional bodies.

Malcolm Harrison, spokesman for the Tenancy Deposit Scheme, said: "What's going to happen is really quite simple and is to ensure our insurers will cover us. We have written to tenants already, explaining the situation, and to make sure that if they are renting, then the agent is regulated.

"We recommend the use of a regulated letting agent anyway, not least because it means they have complied with all the letting regulations."

But spokesperson for the National Landlords Association, Steven Hilton, has said the news has come as a shock to the industry. He said: "It came as a bolt out of the blue. We always advise that landlords use letting agents who are approved, but we didn't see this coming.

"It's important the deposits remain protected which is our priority, that is where our resources are going to be. I think that on the whole this has been a commercial decision."

Aboutproperty asked Tessa Shepperson, solicitor and editor of website www.landlordlaw.co.uk, if she had any advice for tenants and landlords following the news.

She said: "The withdrawal of the TDS service from unregulated agents is bound to annoy many reputable letting agents who have chosen not to be a member of one of the main professional organisations.

"Landlords using letting agents who hold their tenancy deposits for them, should check with their agents to see whether this will affect them, and if so, what steps they are taking to ensure that deposits continue to be protected after 6 April.

"Unless they join one of the approved organisations, unregulated agents will now be left with the mydeposits scheme run by the National Landlords Association with Hamilton Frazer Insurance, and the Deposit Protection Service, which is free of charge.

"Unregulated agents might therefore want to consider joining one of the approved professional organisations, such as NALS (the National Approved Letting Scheme) before April, to allow them to continue to use the TDS service."

The Scheme is advising landlords and tenants to be certain either that their lettings agents are members of either the Association of Residential Letting Agents (ARLA), The National Approved Lettings Scheme (NALS), the National Association of Estate Agents (NAEA), or the Royal Institution of Chartered Surveyors (RICS); or that deposits are protected under one of the other government authorised deposit protection schemes: Tenancy Deposit Solutions (trading as mydeposits.com) or The Deposit Protection Service.

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