The government has greenlighted two new custodial tenant deposit schemes from April 2016.
In the move, the government has renewed the contract for the long-running Deposit Protection Service (DPS) to continue offering a custodial service. In addition, the DPS run an insurance based scheme whereby a fee is paid allowing landlords or agents to retain the deposit in their bank account. Landlord subscribers to the Guild of Residential landlords get a discount code to reduce the premium.
The new schemes – the Tenancy Deposit Scheme and mydeposits – give landlords a choice of custodial services for the first time.
Deposit protection was made law in 2007.
A custodial deposit protection scheme is a free service for landlords. Instead of paying a fee, the deposit is held by the scheme and released at the end of the tenancy. The costs of the scheme are covered by interest earnt on the deposits held.
Eddie Hooker, CEO of mydeposits, said:
“We’re taking a fresh look at deposit protection and are investing to create a faster, smarter scheme designed to remove delays and problems associated with deposit protection.”
The company has also carried out research that revealed tenant awareness of deposit protection has risen to a new high.
Eight out of 10 now say they are aware of the law and how their deposits are protected.
“This rise in awareness is significant because the law is designed to protect tenants’ money. It’s vital that all tenants know and understand their rights,” said Hooker.
The Tenancy Deposit Scheme runs custodial deposit schemes in Northern Ireland and Scotland.
“ This is a great step forward which will benefit agents, landlords, and tenants, and offer valuable new flexibility to suit the needs of members,” said chief executive Steve Harriott.
Find out more about custodial deposit protection: