From the 6th April 2007 every deposit taken by a landlord in respect of an assured short-hold tenancy will need to be protected by a Tenancy Deposit Scheme. If the rules are not followed this will have implications for the ability of landlords to take possessions proceedings in relation to the tenancy.
The purpose behind the new Tenancy Deposit Schemes is to protect the tenant’s deposit and provide ADR (alternative dispute resolution) methods of resolving disputes between landlords and tenants in relation to deposits.
There are three authorised schemes available:-
1. Computershare Investor Services PLC who will run the only “custodial” deposit scheme which is where deposits are paid into and held in a separate account operated by the scheme administrator. The ADR service will be provided by the Chartered Institute of Arbitrators www.uk.computershare.com
2. The Dispute Service Ltd who will run one of the two insurance based deposit schemes directed primarily at letting agents. It will also run the scheme’s ADR service www.tds.gb.com
3. Tenancy Deposit Solutions Ltd will run the second of the insurance based schemes. This scheme is sponsored by the National Landlords Association and administered by Hamilton Fraser Insurance which will be directed primarily at landlords. The Chartered Institute of Arbitrators will be the principal provider of the ADR scheme www.mydeposits.co.uk
It is likely that the custodial scheme will be free but the insurance based schemes will require the landlord to pay a fee.