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Tenancy Deposit Scheme attack unjustified

Ian Wilson [managing director of Martin & Co] has been disingenuous in his attack on the system of Tenancy Deposit Protection that we have in place [June 12].

The scheme now covers a very high proportion of Assured Shorthold Tenancies entered into since it became mandatory in April 2007. It has worked well to safeguard tenants’ deposits and to resolve disputes about them when tenancies end.

The requirement to have competing Tenancy Deposit Protection schemes was set by Government. It was not as a result of industry pressure. The private rented sector had proposed a different structure with a scheme for agents and a scheme for landlords.

It has been left to the three schemes themselves to promote tenancy deposit protection. I believe they have done this remarkably well.

The TDS alone protects nearly 1.4 million tenants in £870,000 tenancies and safeguards almost £1bn in deposit money. The TDS does not charge a high annual premium, as Mr Wilson infers. The premium is charged to The Dispute Service Ltd by our insurers in respect of each member of TDS. We are not insurance brokers. There is a subscription, payable for each member letting agent’s office of which the premium forms a part. This works out very reasonably for an average portfolio on a per property basis. For instance, a member of the Royal Institution of Chartered Surveyors will pay £583 per office. If they are managing 100 properties from that office the proportionate subscription will be £5.83. I am not aware that member agents have any difficulty in recharging the subscription to their clients.

Mr Wilson states that reputable and honest agents were attracted to the TDS because they could continue to earn interest on their client deposit account. That is not as attractive a proposition as it once was, but it almost certainly will be again in the future.

I believe that agents also value the opportunity that holding the deposit gives them to re-establish their business relationship with the landlord at the end of the tenancy.

Mr Wilson states that when he audits live tenancies he finds discrepancies between the TDS’ online records and reality. That’s because agents are neglecting to modify their online records to show that tenancies have ended. We decided that it would be unreasonably bureaucratic to harass them.

The suggestion that the custodial scheme, DPS, must take on a policeman role, to investigate and challenge in cases where a tenancy has been notified to them but the agent or landlord is withholding the cash, would run counter to the spirit of the legislation and require an amendment to the Housing Act 2004.

The Government set up Tenancy Deposit Protection on the principle that tenants would police it. While there were doubts expressed about this policy at the beginning, it appears to be working well, judging by the ever-increasing number of landlords being taken to court by their tenants. This has led to some very expensive results for the landlords in question. I’m not sure that Mr Wilson would really want to set up yet another regulatory body, in this case funded by the interest on deposits held by the custodial scheme.

Lawrence Greenberg, Independent case examiner, The Dispute Service Ltd

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