NEWS

As of the 6th April 2007 it became mandatory for all Assured Shorthold Tenancies in England and Wales to be protected by a tenancy deposit scheme, the government awarded three contracts to run these schemes.
There are two types of scheme: a single custodial scheme (where deposits will be paid into and held in a separate account managed by the scheme); and two insurance based schemes where the landlord or agent will hold the deposit and any failure on his/her part to repay it to the tenant will be covered by the scheme’s insurance arrangements.

The custodial scheme run by Computershare Investor Services Plc will be free to use for tenants and landlords. The scheme will be funded by the surplus from interest generated on the pool of deposits, with interest also being paid to tenants.

The two insurance based schemes, run by The Dispute Service Ltd and Tenancy Deposit Solutions Ltd sponsored by The National Landlords Association, will be funded through a fee paid by landlords or agents.

If a landlord does not comply and safeguard any deposit taken will mean they cannot issue a Section 21. In addition, the tenant will be automatically entitled to 3 times the deposit amount as compensation!

All three schemes will offer alternative dispute resolution (ADR) services which will be free to use for both landlord and tenant.

Where landlord and tenant are in agreement at the end of the tenancy, the deposit will be split according to their agreement.

Where a dispute arises then two options are available. If both landlord and tenant agree they can use the free ADR service. An adjudicator will assess all documentation and make a judgement which both landlord and tenant will be bound by.

If either landlord or tenant do not agree to use the ADR service then the matter must be referred to The Independent Case Examiner ICE who will make its decision quickly, and the deposit will be paid out without unnecessary delay.
A thorough, detailed, accurate and unbiased inventory will now be vital in the event of a landlord wanting to claim against a tenant’s deposit. Lawrence Greenberg, Chief Executive of the Dispute Service Ltd (who have been awarded one of the new contracts and will also be running the dispute resolution service for that contract) was recently quoted in Agreement (ARLA magazine) as saying that whilst inventories are not a legal requirement, without one, and a good one at that, you may as well not bother even taking a deposit!

Should you require any further information or would like to discuss our services further please feel free to contact us.