Letting agents can compensate for potential losses resulting from a future ban on tenants’ fees by switching to free custodial tenancy deposit protection from insured protection.
The recommendation comes from both the Deposit Protection Service and the National Approved Letting Scheme.
DPS runs both a well-established custodial scheme – launched in 2007 – and a newer insurance one from 2013.
Julian Foster, DPS managing director, said: “Custodial schemes offer a simple solution to the prospect of the ban on letting agent fees paid by tenants that could help agents and landlords reduce operational costs.
“Landlords have entrusted over 5m deposits to our custodial scheme since 2007 and we believe now is the time for those still paying for their deposit protection to make the switch.”
Isobel Thomson, chief executive at NALS, said: ”With agents reviewing their business models ahead of the ban, it makes sense to review what deposit protection costs them and their landlords.
“By switching from insured to custodial tenancy deposit protection, letting agents could see significant savings for them and their landlords, as well as securing deposits with a trusted third party to provide landlords and tenants with complete peace of mind over the security of their money.
“NALS firms also pay a lower annual contribution for Client Money Protection if they lodge deposits with a custodial scheme, and NALS is the only CMP scheme operator which makes this distinction in the contribution rates its firms pay, as we believe this is a fair and reasonable way of assessing risk.”