Deposit protection agency my|deposits has been given the green light to offer a custodial tenancy deposit protection scheme from April 2016.
This means that they will soon be in a position to offer landlords and agents the option of using either a custodial or an insurance based protection service in England and Wales.
Protecting tenants’ deposits is a legal requirement in England and Wales and has been since 2007, despite the fact that some landlords still get tripped-up by this.
If a deposit is not protected within 30 days of receiving it and the statutory information (s213 notice) served on the tenant (or whoever has provided the deposit) within that time, then not only is the landlord subject to a fine of up to three times the deposit, the section 21 no-fault eviction process cannot be used.
Landlords and agents have two options in order to comply with the law: using an insurance based scheme which that involves a fee, or a free-to-use custodial scheme. In the former case the landlord or agent retains the money, whereas in the latter case the money is paid into the scheme.
CEO of my|deposits Eddie Hooker said:
“We’ve been hopeful of winning the contract for some time and have already begun an exciting and ambitious reboot of my|deposits. We’re taking a fresh look at deposit protection and are investing in our systems and processes to create a faster, smarter scheme designed to remove delays and hassle from deposit protection.
“For the very first time, landlords and agents who prefer to use the custodial based option will now have a choice over which scheme they use.”
Existing members with live protections using the insurance based option will be able to lodge these deposits with my|deposits and change to the custodial based option after next April.
Landlords and agents can find more information here