Tenants Deposit Scheme
ENGLAND & WALES: The Government awarded contracts to three companies to run its tenancy deposit schemes on 22 November 2006. The three schemes are:
- The Deposit Protection Service (The DPS) – the only custodial deposit protection scheme – is free to use and open to all Landlords and Letting Agents. The service is funded entirely from the interest earned from deposits held. Landlords and Letting Agents are able to register and make transactions online. Paper forms will also be available should internet access be an issue. The scheme is supported by a dedicated call centre and an independent dispute resolution service. For more information, visit www.depositprotection.com or call 0870 707 1 707
- Tenancy Deposit Solutions Ltd (TDSL) is a partnership between the National Landlords Association and Hamilton Fraser Insurance. This insurance-based tenancy deposit protection scheme enables landlords, either directly or through agents, to hold deposits. Letting agents can also join the scheme. For more information, visit www.mydeposits.co.uk
- The Tenancy Deposit Scheme (TDS) is an Insurance-based scheme run by an organisation called The Dispute Service and was established back in 2003 to provide independent dispute resolution and complaints handling for the lettings industry. It has been running a voluntary tenancy deposit scheme for use by regulated agents since that time and is backed by the three professional bodies for letting agents in the residential property sector, ARLA, NAEA and RICS. For more information visit the website www.tenancydepositscheme.com or call 0845 226 7837.
What About The Tenancy Deposit?
It is quite common for a deposit of an amount equivalent to between four to six weeks rent to be required to be held during the tenancy against the satisfactory performance by the tenant of all the various obligations under the tenancy agreement – but mainly, those relating to the cleanliness and condition of the property.
The relevant clauses in the tenancy agreement should set out who is to hold the deposit (e.g. agent or landlord), whether interest is to be paid or not, what the deposit can be allocated for and the end of tenancy procedures and timescales for its refund.
The best way for a tenancy deposit (bond) to be held during the tenancy is by the ARLA member agent as “stakeholder” between the parties (landlord and tenant). This means that at the end of the tenancy the agent should get the agreement of both sides before making any deductions for damage, cleaning etc.
Ideally, the ARLA agent will be signed up to the Tenancy Deposit Scheme (TDS) which means that in the event of an unresolved dispute or stalemate over the allocation of the deposit, it can be referred to the scheme for a prompt, independent, third party adjudication – so providing a resolution which is fair to both landlord and tenant.