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ARLA launches TDS price hike review

The Association of Residential Lettings Agents is launching a working group to review the Tenancy Deposit Scheme in a bid to resolve the dispute surrounding its new fee structure.

The review is the result of an ARLA meeting held yesterday.

The Negotiator can exclusively reveal that a statement issued to members this afternoon reveals that Robert Jordan, director of the National Federation of Property Professionals and chairman of Jordan's Residential Lettings, will lead the group, whose members are yet to be determined. The group aims to clarify and summarise members' concerns and negotiate acceptable solutions. It is expected to present its conclusions at a TDS meeting scheduled for next week.

The statement, issued by Lucy Morton, president of ARLA, and Gary Smith, president of the National Association of Estate Agents, says: "ARLA Members are appalled by the recent massive increases in TDS Fees and the manner in which they have been communicated. We feel that there has been little or no information as to how these increases can be justified or how an individual firm’s fees have been calculated. This lack of communication is considered to be totally unacceptable."

If retained, the TDS’ new fee structure will result in fees soaring by as much as 1000% for some letting agents, such as Kinleigh Folkard & Hayward, as The Negotiator exclusively revealed last Thursday [January 21], which lettings agents denounced as “monstrous” and “stupidly high”.

The TDS claims that the hike is due to a disproportionate number of claims being made by a minority of its 3,000 members.

The TDS, which was one of three schemes introduced by the government to protect tenants’ deposits, has introduced a minimum fee of £750 for 2010/11, 29% higher than its previous rate of £583. Its spokesman says he expects one third of its 3,000 members to pay the minimum fee, with remaining members set to face a loaded fee based on a formula that takes into account the number of tenancies agents have registered at a particular date in the year to be determined by the TDS, the number of disputes they’ve referred throughout the year and the professional body of which they are a member, since this reflects whether or not they have client money protection in place.

One lettings agency source says: “In this scenario, you get to the situation where you are paying a premium for others’ claims. If this is to be the case, there should be a no claims discount rather than loading.”

The source claims that they are one of a number of agents considering writing to Communities and Local Government regarding their belief that the TDS is not being run properly. They add: “I would even consider paying the full amount of my proposed new fee to get the business model right. It could consider the payment as a loan, which I would could get back in the form of a reduced subscription fee over the next, say, five years.”

In a statement issued to its members this week, the TDS says: "We are very aware that the new charging system has caused apprehension among a proportion of the membership. Although we have had no alternative but to change the system, it is now fairer than before and still very competitive. Nevertheless, we recognise that the transition may not always be smooth and we are working to find ways of alleviating problems that have arisen.

"We take these matters very seriously and are working on behalf of our membership. However, we still have to comply with the terms of our contract to provide the service according to current legislation."

The statement claims that the TDS is addressing members' concerns.

Thinking of transferring your tenancies from the TDS? For more information, click here.



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