The tenancy deposit schemes have been accused of failing to act in tenants’ interests – and of being in the pockets of landlords.
Generation Rent summonsed the leaders of all three schemes to a meeting following a Channel 4 News item on rent-to-rent landlord Daniel Burton.
The programe revealed that although Burton, who ran Unida Place, had protected some 160 tenants’ deposits through Mydeposits, he was expelled from the scheme, leaving tenants unprotected.
At the meeting, Generation Rent argued the loophole that enables rogue tenants or landlords to abscond with tenants’ money should be closed.
It said that tenants’ money should be protected for the duration of the tenant, not the duration of the landlord’s or agent’s membership of the scheme.
However, the three schemes responded to Generation Rent making it clear that they had to operate in accordance with the law on deposits.
The letter says:
It was good to meet you to discuss the issues raised in the Unida Place case.
As you are aware, deposit protection schemes operate in accordance with the Housing Act, but we recognise that when landlords and agents fail to protect deposits that tenants’ money may be at risk.
Unida Place’s tenants ultimately ended up at risk because of the company’s failure to re-protect their deposits in accordance with the law. Where landlords and agents don’t comply with the legislation, tenants have the right to seek redress through the Courts where they may be awarded their deposit and up to three times the deposit value if non-compliance is proven.
We would like to reassure you that we are constantly reviewing our processes and procedures to ensure that tenants’ money is safeguarded under the terms of the law, and where we feel improvements are necessary we will keep you informed as to any changes that we make.
In the meantime, we would like to take the opportunity to thank you again for meeting with us regarding this issue.
Yours faithfully,
Kevin Firth – DPS
Steve Harriott – TDS
Eddie Hooker – mydeposits
In response, accusing the schemes of failing to close a rip-off loophole, Generation Rent director Alex Hilton said: “If there is the slightest chance that a landlord can steal a tenant’s deposit, a scheme simply cannot claim that they offer protection.
“It is clear that despite holding £3bn of tenants’ money, the deposit protection schemes have been entirely captured by the landlord lobby.”
Comments (6)
I have to say that like a number of industry observers, I have always found the 'esprit de corps' so often publicly displayed by the 3 Deposit Scheme providers really most unsavory. unhealthy and confusing. All three have different rules and terms of entry for users. For example, DPS (Insured) will only allow 'accredited' agents (with CMP) to access its facility and also 'covers' an individual tenancy for its duration. TDS only USED to cover 'accredited' agents until it reversed that decision recently – a big mistake and disservice to the industry and the public many would say. The consistent problem has regularly been my|deposits penchant to 'unprotect' a deposit when it perceives there to be a problem, leaving the tenants potentially exposed in a way that the legislation was clearly intended to prevent. All schemes should 'fail safe' as far as the tenant is concerned – only allowing 'accredited' agents access to 'insured' TDP's would not need legislation. All others would need to use the 'Custodial' scheme?
You hit the nail on the head Eric, one of the recurring issues with groups like Generation Rent is the frustrating lack of knowledge they seem to possess on how the industry actually works and the parameters of the various housing legislation we have to work within.
Hello Ray Comer! How come it took you so long to find us?
I don't think you can be too hard on Generation Rent; CLG, DWP both share similar levels of knowledge but the ace up their sleeve is that when they demonstrate their ignorance, we end up picking up the pieces.
On the other story Jonathan Bramhall is working on legislation because less than 3 one hundreths of one percent of all tenants have been moved on citing their whinging and moaning as the cause of being served a Section 21 notice. There is actually more chance of being hit by a meterorite (1:3200) than being evicted because they bellyached about a problem with the property (1:3700), Perhaps CLG will decree that every tenant should be issued with a hard hat, paid for by the letting agent or landlord just in case.
DPS is the way to go. Why use an Insurance based scheme?
If there is indeed a loophole in the legislation brought in by the previous Government, surely only Parliament can amend it. Deposit Schemes abide by the Law but can't change the bits they don't like.
Tenants can only be fully protected if deposits are paid into a custodial scheme.