WIREDGOV

Tenancy Deposit Protection Scheme - Kelly

COMMUNITIES AND LOCAL GOVERNMENT News Release (077) issued by The Government News Network on 5 April 2007

From tomorrow, tenants who pay a deposit to a landlord will have enhanced protection under the new Government authorised Tenancy Deposit Protection Scheme (TDPS).

Introduced under Part 6 of the Housing Act 2004, the new mandatory Tenancy Deposit Protection schemes will mean that from 6 April all deposits taken by landlords and agents in England and Wales must be protected. The changes will significantly improve tenants' rights and ensure that their deposits are not unfairly withheld.

Tenants pay an average of £700 as a deposit on a property. In 2005/06 19% of tenants had their deposit returned in part whilst 11% did not get their deposit returned at all. Recent Government surveys found that 17% of tenants felt that all or part of their deposit had been withheld unfairly.

Where damage has been done to a rented property it is absolutely right that the cost of repairing that damage is taken from the deposit funds. But, where no damage has occurred, keeping hold of this money is unfair. That is why the Government have taken steps to ensure that deposit money is better protected and introduced new dispute resolution services that will limit the amount of disagreements that end up in court.

Communities Secretary Ruth Kelly said:

"The vast majority of landlords and agents act fairly and take their responsibilities seriously. However, there are a minority pocketing deposits and profiteering from other people's money. This is completely unacceptable. The new rules will inject greater fairness into the rental market and mean that when a tenant sticks to the rules, the landlord/agent must too.

"With the average deposit coming in at around £700, we are talking about significant amounts of money. People hand over deposits in good faith and rely on getting their money back in order to move on to their next property. It is not right that under the current system lack of protections and lengthy, costly arbitration procedures mean that thousands of tenants end up waving goodbye to their cash. The changes we have made will put an end to this."

From 6 April Landlords and agents will, by law, have to sign up to one of three schemes that have been awarded contracts by the government. The three schemes are:

* The Deposit Protection Service (The DPS) - a custodial scheme where landlords must hand over the deposit in full. Free to use and open to all Landlords and Letting Agents the DPS service is funded entirely from the interest earned from deposits held. If a dispute arises between the landlord and the tenant at the end of the tenancy the scheme will hold the amount until the dispute resolution service or courts decide what is fair.

* 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.

* The Tenancy Deposit Scheme (TDS) is an insurance-backed deposit protection and dispute resolution scheme run by The Dispute Service that builds on a scheme established in 2003 to provide dispute resolution and complaints handling for the lettings industry. The new scheme enables letting agents and landlords to hold deposits.

In the above insurance based schemes (TDSL, TDS), where a landlord and tenant disagree on what should be paid back, the landlord/agent must hand over the disputed amount to the scheme for safekeeping until the dispute is resolved. If for any reason the landlord fails to comply, the insurance arrangements will ensure the return of the deposit to the tenant if they are entitled to it.

Tenants will be able to check to see whether their landlord has protected their deposit in one of the schemes. If they haven't done so within 14 days, the tenant can apply to the courts, who can direct the landlord/agent to pay three times the deposit back to the tenant.

Each scheme will also include a free, Alternative Dispute Resolution (ADR) service. Once the tenancy has finished the deposit must be paid back within 10 days so long as both parties agree on the figure. If a dispute arises the landlord/agent and tenant can use the independent resolution service. It is completely free of charge with any interest accrued from the deposits being used to fund it. Any extra money will be put back into the central fund and used for pay-outs to landlords or tenants. There has been a wide range of support for the changes that are being introduced.

Adam Sampson, Chief Executive of Shelter said:

"Getting back deposits from a minority of unscrupulous landlords puts tenants in a David and Goliath situation and often leaves them out of pocket. This scheme provides a vital safety net for both tenants and responsible landlords, which should ensure the rental system is fairer for everyone."

David Harker, Chief Executive, Citizens Advice:

"Citizens Advice is very pleased that this reform which we campaigned for is now coming into force. Tenancy Deposit Protection will directly benefit thousands of tenants who face problems getting their deposits returned fairly at the end of the tenancy. It will also increase consumer confidence right across the private rented sector as tenants will be assured that their money is protected and that there is a fast and fair system for resolving disputes."

Mike Stimpson, Chair, National Federation of Residential Landlords (NFRL) said:

"Good landlords do not support landlords who break the law. We encourage landlords to make sure they are aware of the legal requirements of tenancy deposit protection.

"We all want to encourage best practice renting - with good inventories and agreements on the condition that a house should be in when a lease ends. Spending just a little time at the beginning of a lease on agreeing the basics can stop most problems with deposits occurring in the first place.

"If there is no decent inventory, landlords can't expect to withhold the deposit. Equally tenants who damage a property or leave it in a filthy condition mustn't expect to get their deposit back." This press notice applies to England and Wales.

Notes to Editors

1. Tenancy Deposit Protection (TDP) will add to measures, set out in the Housing Act 2004 to raise standards in the private rented sector.

2. TDP will apply to all assured shorthold tenancies (ASTs) in England and Wales where a deposit is taken. Virtually all new contracts to let a property are ASTs.

3. TDP will start on 6 April 2007.

4. The aims of TDP are; to ensure good practice in deposit handling, so that when a tenant pays a deposit, and is entitled to get it back, they can be assured that this will happen; to assist with the resolution of disputes by having an alternative dispute resolution service (ADR). It will also encourage tenants and landlords to agree - at the start of the tenancy - the condition and contents of the property.

5. When preparing TDP proposals, the Department for Communities and Local Government (formerly ODPM) undertook consultations with landlords, tenants and their representative bodies. This consultation will continue throughout the initial implementation process.

Enquiries: 020 7944 4400;
Releases: http://www.communities.gov.uk