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Improved tenancy deposit protection is more than spin
publication date: Apr 6, 2009
Twenty years have passed since the Housing Act 1988 heralded the deregulation of the Private Rented Sector. In came the Assured Shorthold Tenancy and out went the provisions of successive well-intentioned but disastrous Rent Acts that had all but killed the rental market.
Deregulation allowed the rental market to recover with remarkably few problems. Those that did arise were addressed in the Housing Acts of 1996 and 2004.
The 2004 Act was also the launch pad for mandatory tenancy deposit protection. This was to provide three schemes that would safeguard deposits in three ways that are similar in principle but suited to different situations. Each provides for independent Alternative Dispute Resolution that is free to the tenant in the event of a deposit dispute.
LAYING THE GROUNDWORK
At the Tenancy Deposit Scheme (TDS), we had already piloted tenancy deposit protection under the auspices of the then Office of The Deputy Prime Minister. When support for this pilot was withdrawn, the foresight of ARLA, joined by the other professional bodies, brought about the Tenancy Deposit Scheme for Regulated Agents. This was then ready to become the Tenancy Deposit Scheme when the government authorised the three schemes to cover the requirements of tenancy deposit protection.
All were up and running from April 2007: the Deposit Protection Service, commonly known as the custodial scheme because it also holds the deposits, and the two ‘insured’ schemes: mydeposits.com, set up by the National Landlords Association and Hamilton Fraser primarily for small landlords; and the Tenancy Deposit Scheme, with a core membership of letting agents and corporate landlords.
The rest, as they say, is history – except that the schemes were, in many ways, inventing the wheel. The concept of deposits being compulsorily safeguarded and policed by the tenants themselves if deposit protection was not offered, together with free access to Alternative Dispute Resolution was, and still is, new. Trying to ensure that everyone with an interest in tenancy deposit protection actually understands this and its implications is not easy.
It has been an education process for us all. The schemes have had to learn how to inform and facilitate and to ensure that landlords, tenants and agents understand not only what deposit protection is about but also how to make it work for them.
Safeguarding money is a familiar concept to regulated agents. Members of ARLA, NALS, NAEA and RICS are all well used to client accounts and proper accounting. Where it begins to differ is when and if a dispute arises. Agents have long been accustomed to sitting pig-in-the-middle between a landlord and a tenant, whose firm ideas of who is in the right or wrong cannot be shaken. However, in those days at least all involved have had an intimate knowledge of what the dispute is all about; and an awful lot of these disputes, as many agents will recall, will have dragged on.
Now the new wheel really begins to gain momentum. An independent third party, the Independent Case Examiner, ICE, in the case of the Tenancy Deposit Scheme, has to be briefed, and rapidly.
This means that all the details of the dispute have to be assembled to allow the ICE, who is new to the case, to adjudicate. And only in that way can the landlord and tenant get quick satisfaction, even if the judgement does not go in their favour. And, most especially, if that proper briefing, by way of the correct paperwork, not has gone out immediately, the agent will be back playing pig-in-the-middle. This time it will be from both parties for not getting a fast response because the facts have not been assembled quickly and efficiently.
LISTENING, LEARNING, PROGRESSING
At the Tenancy Deposit Scheme we have listened to and learned from our members about how to help them to help themselves.
We have virtually reconstructed the website, produced films to answer Frequently Asked Questions and to illustrate how to register a tenancy and approach a dispute should it occur. This Spring, we are going a step further with the appointment of an Outreach Manager who will be able to tailor-make learning solutions for offices having trouble coping with the new wheel. The Outreach Manager will also provide the Scheme with personal feedback from our members. This will enable us to monitor how our information programmes are working more effectively than we can now.
The Tenancy Deposit Scheme has been growing fast. By the beginning of this year deposits worth over three quarters of a billion pounds for 768,175 tenancies were protected and we had processed nearly 4,000 disputes. The big wheel keeps on turning!
The Tenancy Deposit Scheme website can be found at www.thedisputeservice.co.uk
The Tenancy Deposit Scheme has appointed an Outreach Manager whose role in the organisation is to “educate, inform, facilitate and to gather feedback from member letting agents”.
Helen McCarthy has been working as an Alternative Dispute Resolution adjudicator for the past year and has spent most of her career in the PRS, starting with fi ve years as a manager for Leaders, the Southern Counties lettings multiple, before working for the Rent Service as a Rent Offi cer.
“At Leaders, I received in-depth training in all the best practices of lettings from none other than Neville Lee, one of the founding fathers of ARLA. You couldn’t have a better start than that,” Helen pointed out.
“I’m looking forward to helping the Tenancy Deposit Scheme break new ground in this new role. There is already a solid base of information and I am looking forward to meeting member agents and helping them to use the systems to their best advantage. This will help to cut costs and keep their subscription levels down.”
Lawrence Greenberg, Chief Executive of the Tenancy Deposit Scheme welcomes Helen: “This appointment is a very important development for the Tenancy Deposit Scheme and we hope that the Outreach Manager will help all our member letting agents to fully understand tenancy deposit protection and the way that the Tenancy Deposit Scheme works. It will help them and provide us with up-to-date feedback about practical problems encountered and, most important, about ways we can continue to improve the service we offer.”