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Considering switching tenancy deposit scheme?

The Tenancy Deposit Scheme's recent rate hike has forced agents to review their options. Here, we bring you an exclusive Q&A on all you need to know about transferring tenancies to Mydeposits, one of the two alternative deposit schemes.

 

The Negotiator: How does Mydeposits differ from the Tenancy Deposit Scheme and the Deposit Protection Service?

Mydeposits: The scheme has roughly 50,000 landlord members, and 3,000 agents. It was primarily designed for landlords who wish to hold on to the deposit themselves, but agents have always been able to join.

TN: If an agent transfers their business to Mydeposits, what happens to the existing deposits, which they protected with the Tenancy Deposit Scheme? Are they still protected?

MD: The TDS must clarify this question for its members. In order to comply with the Housing Act 2004 and to maintain protection for the deposits, if agents decide to transfer they will have to re-protect all deposits held on live tenancy agreements immediately with, for example, Mydeposits and pay the requisite fees. Deposits taken and held on any new tenancies or renewed/extended tenancies will require protection fees to be paid.

TN: What is your pricing model?

MD: It is based on a pay-as-you-go model whereby agents purchase deposit protection as necessary. Prices are linked to volume purchases, so the more protections agents buy, the cheaper the individual unit cost becomes.

See for prices for accredited agents. The standard price is unchanged at £20.00 per deposit protection, reducing by up to 20% if agents opt to purchase block protections in advance. Pricing is not dependent on dispute volumes experienced by the agent. 

Protection fees relate to the length of the fixed tenancy agreement.  Therefore a protection fee is required each time the tenancy agreement is renewed or extended.  The only exception to this is where the agreement converts to a statutory periodic tenancy where a new protection fee is not required. 

Agents pay their protection account on a monthly basis. All fees quoted are excluding VAT at the prevailing rate.

TN: Are there any other charges agents should be aware of?

MD: Yes.  We charge a registration fee of £100 plus VAT per branch registered with the Scheme and an annual account renewal fee of £50 plus VAT per branch registered with the Scheme.  These fees cover administration charges in respect of fraud and financial credit checks necessary under the Proceeds of Crime Act 2002. 

TN: How does your dispute management process work?

MD: Please see

TN: What is your average dispute turnaround time?

MD: On average between 60 and 90 days, which is within the Communities and Local Government’s Key Performance Indicators thresholds.

TN: How do you assess disputes? Do you use external, independent adjudicators and if yes, will you retain them?

MD: We have no plans to make changes to its use of independent assessors. Unlike the other two schemes, we continue to use external adjudicators for 75% of all disputes requiring the Alternative Dispute Resolution Service.

TN: Do you have any automated services to assist agents with the block transfer of deposits registered with the TDS?

MD: We follow the requirements of the Prescribed Information Order, as set out by Schedule 10 of the Housing Act 2004.  For our larger users, we have developed automated data transfers using XML schema definitions and web services; we can provide this information on request. We also provide optional consultancy services to assist with our automated import facilities, as well other less complex data imports if required, including manual data transfers in certain circumstances. 

TN: Is there an additional cost for these services?

MD: Possibly.

TN: Do I need to change any of my existing tenancy agreements?

MD: No.  Confirmation to the tenant of deposit protection is provided in the form of an individual Deposit Protection Certificate.  This document and the Information for Tenants leaflet provides the large majority of the Prescribed Information, which the landlord, via the agent, by law has to provide to the tenant within 14 days of the tenant having passed the deposit to the agent. The main exclusion from the DPC is the requirement for the landlord/agent to sign the certificate, which obviously we cannot assist.  If you can provide us with the email address of the tenant we can also send a copy directly to the tenant.

TN: Do you accept deposit protection for landlords that agents act for who are based overseas?

MD: Yes, but only upon formal request by you and the completion of an application form.  We reserve the right to refuse this facility without appeal.  

TN: Are there any other differences between you and TDS that agents should be aware of?

MD: We undertake annual fraud and financial credit checks on all our agent members including the request for evidence of segregated client money accounts and balances within these accounts that match the level of deposit protection we provide.  Failure to provide this evidence will invalidate membership.

We also require the main correspondence address of the landlord. We do not accept 'C/O' addresses or PO Boxes, so that we can explain to them the principles of the legislation and what penalties they face if the agent fails to protect the deposit or have their membership cancelled. 

TN: Do agents need to belong to a professional body and/or The Property Ombudsman Service with Mydeposits, as with the TDS?

MD: We accept all agents, regardless of whether they belong to a professional body, provided they meet Mydeposits’ membership criteria, as laid out in the scheme rules.

TN: What about client money protection?

MD: We do not offer client money protection.

TN: Will you be recruiting staff to cope with the potential increase in demand for your service?

MD: We continue to assess demand and staff will be recruited if necessary.

TN: Will you increase membership costs in line with increasing demands on your resources?

MD: We have no plans to increase costs; our business model is robust.

TN: How can you ensure that you won’t face the same funding problems as TDS in the future?

MD: The pricing structure operates in a completely different way, and has shown to be robust and consistent. This won’t be changing.

TN: In what circumstances would Mydesposits be unsuitable for my tenancies?

MD: The scheme is suitable for all Assured Shorthold Tenancy agreements.

For further details on Mydeposits’ scheme rules  visit:

 

The Deposit Protection Service, the third government-approved scheme, declined to contribute or comment on the TDS debate. 

 

 

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