Almost one year on from its introduction, 40 per cent of UK landlords are still unaware of the Tenancy Deposit Scheme (TDS) leaving them at risk of committing a civil offence and being forced to pay tenants three times the deposit amount.
The Tenancy Deposit Scheme was introduced by the Government on April 6th 2007 to protect tenancy deposits and provide a fairer system for settling disputes about the return of a deposit at the end of a tenancy.
But nearly a year on, independent research commissioned by The Money Centre, one of the country’s largest independent buy-to-let mortgage brokers, has found that 40 per cent of landlords questioned are still unaware of the scheme. A further 22 per cent of respondents said they were aware but did not fully understand it, leaving only 38 per cent confirming they were aware of the scheme and understood it.
The results show that awareness levels have plateaued since The Money Centre last reported findings on the TDS scheme in October 2007, leaving a large proportion of landlords still in the dark about the legislation. Awareness of the scheme has actually dipped slightly since October, with a six per cent drop in the number of respondents who said they were aware of the scheme and fully understood it.
Lynsey Sweales, marketing and PR director of The Money Centre commented: “The results of this research are extremely worrying. The scheme has now been in place for nearly a year, yet many landlords are still unaware of the legislation and its implications. The good news is more than half of those surveyed did believe the scheme would benefit both landlords and tenants, as it was designed to do. But until awareness, understanding and participation can be improved the scheme won’t be fully effective.”
The Tenancy Deposit Scheme was introduced to ensure:
· tenants get all or part of their deposit back, when they are entitled to it,
· any disputes between tenants and landlords are easier to resolve, and
· tenants are encouraged to look after the property they are renting.
Deposits are a big issue for many landlords with half of those surveyed confirming they had withheld all, or part of, a tenant’s deposit to cover property damage and other costs (such as cleaning costs and unpaid utility bills) at some stage. Therefore, it may not be long before problems arise due to a lack of participation in the scheme, and if a landlord or agent does not protect a tenant’s deposit, they can be ordered by the local county court to pay the tenant three times the amount of the deposit.
While the TDS only covers tenancy agreements made on or after 6th April 2007, as time goes on and tenancy agreements are renewed and changed, all landlords will eventually become affected. It is therefore vital that landlords take the time to understand the TDS now and avoid becoming ignorant of the law.
Lynsey Sweales concluded: “Once again we are urging landlords who are not up to speed with the TDS to do their research immediately and advise them to join their local landlords’ association. These organisations provide advice to their members on changes in legislation and can act as a forum to share best practice.”
Sources of further information for landlords include:
The Department for Communities and Local Government: www.direct.gov.uk/tenancydeposit or 0845 609 0696
Landlords’ associations: National Federation of Residential Landlords – www.nfrl.co.uk; National Landlords Association – www.landlords.org.uk; Residential Landlords Association – www.rla.org.uk
The research was undertaken by independent research agency BDRC on behalf of a syndicate of buy-to-let mortgage lenders and brokers. Online interviews among 493 residential property investors were conducted in December 2007.
For further information or a spokesperson from The Money Centre please contact
Donna Barker or Dawn Humphreys at Tribe on 01603 417722 or email firstname.lastname@example.org or email@example.com
The Money Centre is one of the UK’s largest independent buy-to-let mortgage brokers in the UK, with over 160 consultants. It provides over 5,000 on-line quotes and manages over £150 million worth of new applications each month.
The Money Centre is a member of the National Association of Commercial Finance Brokers (NACFB).
About the Tenancy Deposit Scheme
From 6 April 2007, all deposits (for rent up to £25,000 per annum) taken by landlords and letting agents for Assured Shorthold Tenancies in England and Wales, must be protected by a tenancy deposit protection scheme.
The Government introduced the scheme to protect tenancy deposits and provide a fairer system for settling disputes about the return of a deposit at the end of a tenancy.
The scheme allows tenants to get all or part of their deposit back when they are entitled to it, make disputes easier to resolve (with a free dispute resolution service) and encourage tenants and landlords to make a clear agreement from the start on the condition of the property.
There are two types of tenancy deposit protection scheme available for landlords and letting agents:
Insurance-based schemes: the tenant pays the deposit to the landlord, the landlord retains the deposit and pays a premium to the insurer. There are two insurance-based schemes: The Tenancy Deposit Scheme, run by The Dispute Service and Tenancy Deposit Solutions Ltd which is a partnership between the National Landlords Association and Hamilton Fraser Insurance
Custodial scheme: the tenant pays the deposit to the landlord or agent and the landlord or agent then pays the deposit into the scheme. There is one custodial scheme, The Deposit Protection Service
The TDS only covers tenancy agreements made on or after 6th April 2007. Tenants who paid a tenancy deposit before that date will not be protected by the scheme unless their landlord or agent renews the tenancy on or after 6th April 2007, and issues a new agreement.