Tenancy deposit scheme

Deadline approaches for landlords and tenants

Landlords and tenants who use the Tenancy Deposit Scheme (TDS) have been told they have until April 6, 2009, to ensure that they are protected by a regulated letting agent or government authorised deposit protection scheme. This follows a warning to tenants that they need to ensure their landlords have safeguarded their deposits. In an announcement on January 7, 2009, confirmation was given that the TDS will only be available to letting agents who are members of professional bodies.

Landlords using letting agents who hold their tenancy deposits for them, are advised to check with their agents to see whether this will affect them, and if so, what steps they are taking to ensure that deposits continue to be protected after April 6.

Unregulated agents may wish to consider joining one of the approved professional organisations, such as NALS (the National Approved Letting Scheme) before April, to allow them to continue to use the TDS service. Otherwise if they don’t join one of the approved organisations, they will be left with the mydeposits scheme run by the National Landlords Association with Hamilton Frazer Insurance, and the Deposit Protection Service, which is free of charge.

The TDS was established under the Housing Act 2004, and requires landlords to register details of the start and end of all Assured Shorthold Tenancies, by way of protecting tenant deposits and ensuring their return at the end of tenancy. The TDS at the insistence of their insurers will now only provide deposit protection and alternative dispute resolution to letting agents who are members of recognised professional bodies.

Spokesman for the TDS, Malcolm Harrison, said, “What’s going to happen is really quite simple and is to ensure our insurers will cover us. We have written to tenants already, explaining the situation, and to make sure that if they are renting, then the agent is regulated.

“We recommend the use of a regulated letting agent anyway, not least because it means they have complied with all the letting regulations.”

Steven Hilton, spokesperson for the National Landlords Association, commented that the news had come as a shock to the industry. He said, “It came as a bolt out of the blue. We always advise that landlords use letting agents who are approved, but we didn’t see this coming.

“It’s important the deposits remain protected which is our priority, that is where our resources are going to be. I think that on the whole this has been a commercial decision.”

The Scheme is advising landlords and tenants to be certain either that their lettings agents are members of either the Association of Residential Letting Agents (ARLA), The National Approved Lettings Scheme (NALS), the National Association of Estate Agents (NAEA), or the Royal Institution of Chartered Surveyors (RICS), or that deposits are protected under one of the other government authorised deposit protection schemes, Tenancy Deposit Solutions (trading as mydeposits.com) or The Deposit Protection Service.