Capital, the forth tenancy protection agency drops out.
Capita, which was the forth protection agency to receive Government approval to offer a tenancy protection service for landlords and letting agents, has made a surpising announcement of it’s intention to end its service.
The insurance backed scheme, which allowed landlords and agents to retain deposit monies in their own accounts, (as opposed to the custodial scheme where deposit money is paid-in) was launched less than sixth months ago.
The surprise announcement must come as something of an embarrassment for the company and the Government. Capita TDP was only awarded the Government contract to operate the scheme from 1 April 2013.
The idea behind the appointment of a forth operator was to widen awareness of the sector, to increase competition, and thereby to drive down costs.
The Tenancy Deposit schemes have operated in England Wales since they were introduce on the 6th April 2007 under the Housing Act 2004, a similar scheme was introduced in Scotland last year with
Northern Ireland joining earlier in 2013.
The Deposit Protection Scheme was amended by the Localism Act in April 2012 when the period landlords and agents are allowed to protect a deposit and service a statutory (s213) notice on their tenants was extended to 30 days. The amendment also closed several loopholes in what has now been universally acknowledged as poorly drafted legislation, which in its early form became almost impossible for courts to implement any sanctions.
It is now a legal requirement that all deposits taken when issuing an Assured Shorthold Tenancy (AST), which is the default residential tenancy, to protected deposits.
Landlords have a choice of 3 Government approved schemes in England and Wales: a custodial one provided by the Deposit Protection Service (The DPS) where monies are paid into the scheme and there is no charge, and two insurance based schemes where landlords pay a small premium. These two are operated by my|deposits, and the Tenancy Deposit Scheme (TDS).
The move follows a period of disruption in the sector following a high court judgement in the Superstrike Ltd vs. Marino Rodrigues case were some doubt has been cast over the legality of previously protected deposits, which could involve landlords in fines for failing to follow the rules.
It is now likely that further amendments or a Supreme court ruling or both will be needed to further clarify the position of landlords and agents under this legislation, which is generally viewed within the industry as a “dog’s breakfast” of a bill.