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March 2007
TENANCY DEPOSIT SCHEME
As you may well already be aware, the legislation surrounding tenancy deposits changes this Spring. Starting from April 6th, it will become a legal requirement that all tenancy deposits for properties rented on a newly created Assured Shorthold Tenancy Agreement must be administered within one of 3 schemes operated by government approved bodies.
The 3 options that Landlords have are;
1) The Dispute Service Ltd (formerly the Tenancy Deposit Scheme for Regulated Agents TDSRA). This scheme run by The Dispute Service principally caters for agents that are members of the main Regulatory bodies RICS, NAEA, and ARLA. The scheme charges member agents an annual fee and deposits are then held by the agent as before. Any deposit disputes that cannot be settled between landlord and tenant are then passed onto TDS to settle. This scheme is available to private landlords directly, however the rates of £95 per year, for each tenancy will probably put most people off! (find out more by visiting www.tds.gb.com)
2) Tenancy Deposit Solutions Ltd This is an insurance backed scheme sponsored by the National Landlords Association. This scheme allows private landlords to hold tenancy deposits upon the payment of an annual subscription and a separate fee per deposit held. The fees levied are £58.75 per year plus an annual renewal fee of £14.70. Every deposit registered is then charged at £30. (visit TDSL at www.mydeposits.co.uk)
3) Deposit Protection Service The DPS is a custodial scheme operated free of charge by Computershare Investor Services Plc. The scheme is open to all landlords and letting agents. As well as benefiting from an independent dispute resolution service, the deposits the DPS safeguards will also earn interest payable to the tenant. However, for the length of the tenancy the deposit will not be held by the landlord or their agent. (find out more at www.depositprotection.com)
Members that use Letting Agents to find tenants and manage their properties may well be able to include their property in their agents scheme for a fee and will not have to join a scheme of their own, however, any deposit taken will have to be registered and held by the agent and managed within their prescribed scheme.
In all cases it is obviously imperative that a thorough inventory and schedule of condition is taken when your tenant moves into a property .
A simple list of contents will not be enough to satisfy a dispute panel that your property was in 1 st Class condition when Mr & Mrs Bloggs moved in last July.
Landlords should also consider completing a thorough check-in and check-out procedure when their tenant moves in. We would advise all landlords to put themselves in the position of the dispute panel and prepare paperwork as thoroughly as possible.
Claims for unsubstantiated dilapidations expenses are likely to fall on very deaf ears if you have no evidence to prove your case.
Again, if you use an agent they may well be able to produce an inventory for you, alternatively you could appoint an inventory clerk to do the job for you. Locally, Blue Sky Inventories are offering a 5% discount to EMPO members off their standard inventory prices. They can also provide check-in and check-out services as well if required.
It is hoped that the introduction of the Tenancy Deposit Scheme will go without any major headaches, however new systems can take a while to bed down. One significant difference will be in the way you can make deductions for remedial repairs at the end of a tenancy. Any deductions that you now wish to make will first have to be agreed in writing by your tenant. If this amount is disputed and both parties cannot agree, the dispute will be resolved by the Alternative Dispute Resolution service (ADR) and monies will then be reimbursed directly to landlord and tenant by the scheme once final adjudication has been achieved.
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