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