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Tenancy Deposit Protection in England and Wales

VIEWS: 16 PAGES: 24

									Tenancy Deposit
Protection in England
and Wales
Phil Alker
Head of Tenancy Deposit Protection Team
Communities and Local Government
                         Scope of this presentation




My aim is to address four main themes

  •   The drivers behind the proposal
  •   What the legislation requires of us all
  •   How we are seeking to achieve this
  •   Timetable for and activity up to
      implementation


                                                  2
DRIVERS BEHIND TDP



                     3
                             Drivers behind the proposal


• A well managed Private Rented Sector (PRS) is
important: Govt recognises role of landlords in
providing people with affordable housing

• Deposit disputes seen as a historic problem which, if
dealt with, should increase consumer confidence

• Voluntary pilot scheme set up. But used by small
numbers and inconclusive

• Housing Bill provided opportunity to introduce
amendments to bring in Government-run deposit
schemes                                                   4
                           Aims


 To protect tenants deposits

 To enable disputes to be settled quickly and
  cheaply through the provision of alternative
  dispute resolution

 To raise standards in the Private Rented
  Sector by promoting good practice letting,
  including the use of inventories and condition
  surveys

                                                   5
                                          Landlords /Agents



• Minority of landlords unfairly withhold deposits

• Have listened to, and are acting on, landlords‟ and
others‟ concerns, raised in responses to consultation
document, about rent arrears & abandonment.

 Penalties for non-compliance –
• Prohibited use of s.21 grounds for possession if
  landlord not signed up to a scheme, when a deposit
  is taken
• Three times deposit amount payable to tenant if fail
  to comply by the time of a court hearing
                                                          6
                                                    Tenants




• Many landlords will testify to problem tenants

• Part of the deal for their deposits being protected is
that we‟re looking to them to raise their standards

• In tenants‟ interest to leave property in good
condition:

•   More likely to get all their deposit back
•   No reason to withhold their last month‟s rent

                                                           7
THE LEGISLATION



                  8
                   When Does TDP Come Into Effect?




• 6 April 2007

• Only deposits taken on or after 6 April 2007
will need to be protected i.e. an agreement
which is continuing on 6 April will not require
the deposit to be placed in a scheme



                                                  9
            What does the Housing Act 2004 require?




• When a deposit is taken, it must be
safeguarded by a statutory scheme

• Requirement to provide „prescribed
information‟ to the tenant upon receipt of
deposit and to the scheme




                                                 10
HOW WE WILL ACHIEVE THIS




                           11
                 How are we seeking to achieve this




There will be two types of schemes:

• Two insurance-based schemes, supported by
an alternative dispute resolution (ADR) service

• A single custodial scheme, supported by an
ADR service



                                                 12
                                Insurance-based scheme


• Landlord or letting agent retains deposit

• Pays fee to scheme provider for insurance which
covers any misappropriation of deposit

• At end of tenancy, if the landlord and tenant agree
how the deposit should be divided, the landlord returns
all or some of the deposit

• Act stipulates it must be paid back within 10 days (ie
10 days from date both parties have agreed what
should be paid back)

                                                       13
                   Insurance scheme providers and fees




•The Tenancy Deposit Scheme Ltd running scheme
catering primarily for letting agents, but open to
landlords also

•Tenancy Deposit Solutions Ltd running scheme
catering primarily for landlords, but open to letting
agents also

•Fees are on their websites, the addresses of which are
at the end of this presentation

                                                        14
                           Insurance schemes: disputes



• Landlord/letting agent must pass that part of the
deposit which is disputed to the scheme to hold

• Amount in dispute released to tenant (and landlord, if
appropriate) following decision of ADR service (or
courts)

• ADR will be free to use by landlords/agents and
tenants

• Scheme pays out to tenant irrespective of whether it
has received deposit from landlord
                                                         15
                                               Custodial


• Landlord pays deposit into the scheme run by
Deposit Protection Services

• All deposits held in central „pot‟

• At end of tenancy, if no dispute, scheme releases
deposit to tenant - with interest if tenant wants it

• Open to all and free to use by landlords/agents

• Paid back within 10 days of agreement between
parties, as per insurance schemes
                                                       16
                              Custodial Scheme disputes



•   ADR service (or courts)
• Custodial scheme holds that part of deposit subject
to dispute
• Remainder paid back to tenant
• Scheme releases relevant proportions of deposit to
tenant and landlord on conclusion of ADR
• Interest will then be released to the tenant – again, if
they want to receive it


                                                         17
                                  Secondary legislation




• Consulted the industry in Nov ‟05. Listened to and
acting on concerns

• Statutory instruments to be laid in Parliament and the
National Assembly for Wales, to cover:
• information requirements
• interest rate for custodial scheme
• rent arrears & abandonment

• No prescribed inventory or condition survey, but very
much best practice
                                                       18
                         What about communications?


Vital that all groups know about TDP when
implemented in April 2007, therefore information
campaign includes:

• Bi-monthly meetings of TDP Advisory Group and
  communications sub-group.
• Information packs for landlords/tenants‟ advisers
  and media, including FAQs, and leaflets
• Work with LACORS to spread the word amongst
  local authorities and LA workshops
• Journalist briefing schedule
• Roundtables with local and regional stakeholders

                                                      19
                                     Publicity Campaign


• Advertising campaign started 26 Feb, runs to May

• National Press, Regional Press, Trade Press,
Foreign Traveller Press, Online and Radio.

• Posters and Leaflets are available to order free from
the CLG website: www.direct.gov.uk/tenancydeposit

• Leaflets are available in 8 languages including
English

• Radio Tour in April

                                                      20
                                      and finally…




We should now be familiar with:

• The drivers behind the proposal and the
  timetable for delivery

• What the legislation requires and how it will
  be achieved

• How the tenancy deposit schemes will
  operate
                                                  21
                                                 Support for TDP
“

"The good landlords will welcome the scheme while the bad landlords will
try and avoid it. This is another element of efforts to raise standards and
will protect good landlords and good tenants" (Lee Cecil, National
Landlords Association, Wales)
“Good landlords do not support landlords who break the law. We all want
to encourage best practice renting” (NFRL)
“This reform… will increase confidence right across the private rented
sector” (Citizens Advice)
“Any reputable agent will be fully aware of the practicalities of tenancy
deposit once it is in place, and will be able to advise landlords on what to
do. Agents will be able to take on most of the paperwork on behalf of the
landlord so that there is no danger of them breaking the law.”
(Estate agent, Brighton).
“Getting back deposits from a minority of unscrupulous landlords puts
tenants in a David and Goliath situation and often leaves them out of
pocket. This scheme provides a vital safety net for both tenants and
responsible landlords, which should ensure the rental system is fairer for
everyone.”
(Shelter).                                                                 22
                                  Media comments on TDP
“The hope is that the state of renting in England and Wales will improve.
Landlords will write better inventories. They will take photographs of the
flat before the tenancy, so any damage done can be proved. Tenants will
think twice before withholding the rent. Disputes will no longer clog up the
small claims courts. Everyone will thank the government for a fantastic
piece of legislation” (Rosie Millard, The Sunday Times)
“Deposit scheme change allays landlord fears. The Government has
agreed to change its tenancy deposit protection to allay private landlords'‟
fears that they would be left out of pocket if left unable to contact their
former tenants”
(Inside Housing)
“But-to-letters will breathe a sigh of relief to see that The Government has
kept its word and simplified the formula of the Tenancy Deposit Scheme”
(The Daily Telegraph)
“It‟s already been welcomed by just about everybody involved”
(Inside Property – London Tonight)
“One of the biggest bugbears of renting should get easier to resolve with
the introduction of tenancy agreement deposit protection for all assured
shorthold tenancy agreements”
(Jayne Atherton, Metro)                                                   23
                                            More information



www.tenancydeposit.gov.uk
www.direct.gov.uk/tenancydeposit (from 24 Feb)
phil.alker@communities.gsi.gov.uk
Tel: 0207 944 4000

Scheme providers

Custodial scheme
The Deposit Protection Service
www.depositprotection.com 0870 707 1707

Insurance schemes
Tenancy Deposit Solutions www.mydeposits.co.uk
The Tenancy Deposit Scheme www.tds.gb.com 0845 226 7837

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