ej_topmost
Property Hawk

TDS - Which Scheme?

Landlords who let property and take a tenants deposit, have since April 2007 had to use one of the government approved Tenancy Deposit Schemes

We have recently warned landlords about a fake tenancy deposit scheme 
operating under the name of mytenancydeposit.com.

There are two types of government approved schemes for landlords.  Custodial schemes run by the Deposit Protection Service (DPS) and three insurance backed schemes, one ran by Tenancy Deposit Service,  another by My Deposits and another also ran by Deposit Protection Service (DPS).

Property Hawk decided to evaluate the options that landlords now have in taking a tenant's rental deposit and which is the best way to protect them.

Custodial scheme

There is only one approved custodial scheme operated by the Deposit Protection Service (DPS).

According to DPS’s own website 645,000 tenancy deposits have now been taken since its introduction protecting over £480 million of deposits.

The custodial scheme allows a landlord to protect a tenants deposit at no cost to the landlord.  The transaction of paying over the tenant’s deposit can be carried out online and once a landlord is signed up, an account payment can be made using a card and the internet.

Many landlords have been attracted to this custodial scheme because of the absence of cost and also its relative ease of use.  It is the one I currently use.

However, despite these attractions there is a downside to the scheme.  The main one which has attracted much criticism from landlords is the problems getting their deposit back should there be a dispute with the tenant.

This can lead to protracted delays whilst the Alternative Dispute Service try to resolve any disagreement between the landlord and tenant, during which time the landlord is without any of the deposit monies and is often left to fund remedial works out of their own pocket.  Ultimately, the case can go to court with the final decision being made by a judge.  It has to be pointed out that where a judge decides, they frequently will without any strong evidence to the contrary, side with the tenant who is seen as the innocent victim. I can only underline the importance that landlords prepare a property inventory and schedule of condition that will persuade the judge otherwise.

Approved insurance based schemes

The two insurance based schemes do allow the landlord or their agent to retain the tenancy deposit.  This gives many landlords the piece of mind to know that they have the tenant’s money should there be a problem.

The insurance based scheme aimed at private landlords rather than letting agents is called mydeposits.com and is run by landlord insurance brokers Hamilton Fraser.

It costs £57.50 to join the scheme and then £29.36 for each property protected.  Renewing the scheme costs £14.70 each year.  The main advantage to the landlord has been the ability for them to place the deposits within a high interest account and earn interest on the deposited sum.  In the past this clearly would have generated considerable amounts of additional income for a landlord with several properties, especially where the deposit amounts were substantial.  For instance when interest rates were at 5%, interest on £10,000 of deposits would amount to £500 per year.  Currently with rates down below 1%, interest is negligible.

Despite the image of this scheme which indicates that a landlord is free to hold onto a tenants deposit in the same way as they could prior to the introduction of the Tenancy Deposit Scheme.  The reality is that it is still subject to the provisions of the Housing Act 2004 which heralded the arrival of the Tenancy Deposit Scheme.  The result is that should there be a dispute between the tenants and landlord over the amount of deposit withheld the matter will again go to arbitration or court.

Neither custodial or insurance backed schemes allows the landlord to be judge and jury in the way they previously were.

Ignorance of  the Tenancy Deposit Scheme is no defence.


The Tenancy Protection Service recent research of a 1000 landlords shows that nearly 50% of accidental landlords were unaware of their responsibilities under the legislation governing the renting out of property.

Failure to protect a tenants deposit legally could result in various penalties being incurred by the landlord including the loss of the accelerated possession proceedings available under a Section 21 Notice and a fine of the amount equivalent to 3 months rent.

Pre-TDS deposits may also be protected

Most worryingly for landlords is a recent casewhich suggests that a tenant may in fact be protected by the legislation even where the original tenancy began before the implementation of the legislation.

Alternatives to using a Tenancy Deposit Scheme

There are several alternatives to the approved schemes that we have come across that offer a no cost solutions to landlords.

The first we have mentioned before.  It is particularly suitable for landlords letting to students or with Houses in Multiple Occupation or low value lets.

In these cases rents will be low meaning that a months deposit will only be equal to a couple of hundred pounds anyway.  Terry Samuel has stopped taking tenants all together instead preferring to charge the tenant a one off admin fee and insisting that his student tenants have a guarantor.

This solution may be ideal for younger tenants who have little financial history and therefore are always going to score poorly in any credit checks during the vetting of tenants.

Where the tenants are more established professionals, then requiring them to obtain a guarantor such as their parents may not sit well with a high flying lawyer or managing director.  In this case landlords may want to look at a new service that Property Hawk has come across.

The scheme is quite a clever insurance based solution which ‘gets around’ the problem of the tenant not having a deposit by getting the tenant to actually insure themselves against the cost of the tenancy deposit.

The scheme operated by tenantdeposit.com requires the tenant to pay a one off admin fee for the scheme and then pay a monthly insurance cost to ensure that a deposit is maintained.

Example

For example a landlord who would normally require a deposit of £1400 say 2 months rent rather than getting the tenant to have to fork out 1 months advanced rent and 2 months deposit equalling £2100.  A hefty amount even for well heeled professional. Instead the tenant would pay a one of admin fee of £35 and then a monthly insurance fee of £12.50.  This means at the beginning of the tenancy they would be incur a charge of £47.50 and then pay a monthly insurance premium of £12.50.

Where for any reason the tenant stops paying the insurance then the scheme operator requires that the landlord would need to serve notice for possession and will maintain the deposit cover until possession is regained.

The big advantage of this scheme is that the landlord retains all the benefits of holding the tenants deposit whilst the landlord pays for the scheme.  The tenant also gains by only having to hand over a small amount at the start of the tenancy as well as the up frontal rent payment.

Property Hawk verdict.


It seems for most landlords that the no cost custodial scheme is the default option.  I can see little advantage of the insurance scheme unless interest rates reach 6% again.  For many landlords who have student or high risk tenants then the guarantor no deposit option reduces the risk and avoids the bureaucracy involved with using the TDS.  The insurance based scheme operated by tenancydeposit.com seems a nice simple alternative at no cost to a landlord.  It also has attractions to landlords who do not want to put off tenants but also want to ensure that they take a sufficient deposit to make sure their investment property is safeguarded.

Any views on the Tenancy Deposit Scheme?


Hi all
 
I have been a landlord since 1983 and now a a large range of property
 
When the TDS came into force I looked at its impactions and came to the conclusion that it was a waist of time
 
I prefer not to charge a deposit but my background checks on tenats are a lot more though
 
My application form asks for a third party Guarantor and they are checked too
 
since I have moved away from deposits I haven't had any major problems at present I am taking a Third party to the small claims court which is a lot easier than trying to trace a tenant
 
imagine if you can the situation Tenant has done a moon light flit how can you convince the TDS that thay have left
 
its not worth the bother
 
thanks

ELAINE POWER


The DPS is ok but it takes an awful amount of time to get your money if like me the tenants' defaulted on their tenancy agreement.
Further, you MUST have an inventory and photos to prove your case if the tenants' fail to look after your property. - Babs


Hi - My letting agent has just gone bust without any warning whatsoever. (Not ARLA registered). In hindsight I should have gotten all the details about where they deposited my tenant's money but alas I did not. Now I have no clue what scheme it is in, if any at all. All I can think of is that I will have to stump up their cash myself. A ptiful situation. - Jayne


Bookmark and Share

twitter / landlordnews



Comments (7)

Hi I am a landlord and 3 month late to buy the deposit scheme, What should I do?
#1 - Lucy - 03/01/2013 - 20:32
TDS - A JOKE!
The Tenancy Deposit Scheme is a joke, my tenants disappeared without notice and the TDS gave them money back because the exit inspection had not happened the same day as the tenants claim to have vacated. They provided no evidence they had given notice except their own statement and I provided all court documents but still the tenant got their money back despite over £3000 damage to the property - avoid in any way possible!
#2 - SH - 04/24/2013 - 10:57
Tenancy deposit scheme
TDS gave the tenant the deposit money back because the tennant told them my agent had not replied to a letter they had sent requesting it. The tenant posted the letter to my agents office on Xmas eve and therefore the agent didn't have time to reply. The DPS never took notice of my requests for damages even though I supplied evidence via photographs taken by the agent at the start and end if the tenancy. Both agent and DPS said I would have to go though small claims as it was out of there hands now. I was left with a £475 repairs bill and wasted 2 months communicating with the DPS prior to them giving my money away.
#3 - Anthony walker - 05/03/2013 - 17:54
my tenant took advantage of the incompetance of the dps
my tenant owned me money but managed to convince the DPS that my email address was one letter less than what I had sent to them. So they gave her back the deposit and then sent me a letter a month after to say I had ignored their emails. Completely useless
#4 - Fio - 05/03/2013 - 19:23
Gaurantors
I've been a landlord for over 45 yrs, I have had a few good tenants and a lot of bad ones. Until recently I did my own ckecking and letting and dealt with the deposit money, which I retained in my own bank, in a way which was eccepted mutually. Now I use a professional agent, I am no better off, indeed I am poorer for it. The legal obligations and threats conjoured up towards Landlords by our Government are the result of actions by a few criminal landlords for which all good landlords are suffering. I have just let a flat to a woman whose husband has signed as a guarantor, they have fell out, she has defaulted on the rent. We have have had to wait 8weeks before applying to the council for the housing benefit,which is something that I personally hate. we have applied to the Guarantor husband for the balance, he has threatened to sue me for harassment.Can a guarantor having signed the lease simply back out of his responsibilities ?
#5 - Ber - 05/04/2013 - 12:13
TDS
As a landlord with rent owed by tenants and damage confirmed by independent inventory clerk, TDS completely failed to reimburse me for my losses. Even after obtaining a County court judgement in my favour, TDS still refused to release the deposit in case the tenants decided to appeal against the county court. I have first hand experience that TDS fails to follow the deposit terms of the tenancy agreement, TDS failed to follow the County court judgement, and from a landlords' point of view should be avoided. Go to one of the other schemes, not TDS.
#6 - philip brw - 09/12/2015 - 21:01
TDS
As a landlord with rent owed by tenants and damage confirmed by independent inventory clerk, TDS completely failed to reimburse me for my losses. Even after obtaining a County court judgement in my favour, TDS still refused to release the deposit in case the tenants decided to appeal against the county court. I have first hand experience that TDS fails to follow the deposit terms of the tenancy agreement, TDS failed to follow the County court judgement, and from a landlords' point of view should be avoided. Go to one of the other schemes, not TDS.
#7 - philip brw - 09/12/2015 - 21:02
Name
E-mail (Will not appear online)
Subject
Comment
To prevent automated Bots form spamming, please enter the text you see in the image below in the appropriate input box. Your comment will only be submitted if the strings match. Please ensure that your browser supports and accepts cookies, or your comment cannot be verified correctly.
»
This comment form is powered by GentleSource Comment Script. It can be included in PHP or HTML files and allows visitors to leave comments on the website.
Most popular landlord information and FAQs

 

What rental yield should a landlord try to achieve?
Accelerated possession - Section 21 Notice
Non payment of rent
The Tenancy Deposit Scheme (TDS)
How to prepare a property inventory
Grounds for possession of a rental property
Fair wear and tear on a rental property?
Filling out a N5B form for possession
Landlord insurance advice
Letting to students
How do I choose the best tenant?
Should I use a letting agent?
Commercial Mortgages

Whole market search.
Instant personalised quote.
Rates updated in real time.

Find the most suitable mortgage for your individual requirements using our advanced buy-to-let mortgage finder.

Search
News and Advice for Landlords

MAGAZINE
Landlord Freehold Ground Rent Investments Many landlords are attracted to investing in proper...
Hello, I am Amy Castleman, a specialist Housing Solicitor at Premier Solicitors in Bedford. M...
One of the biggest issues that landlords face when tenants move out is the oven clean. Why is...
Should landlords let to students? Students can make good tenants & here’s why: ...
The risks of a leak in an apartment block To date I have bought two apartments in residential...
The three pillars of successful residential investment I’m often asked by newbie landlo...
This has been a question that has pre-occupied me for several years.  By instinct I don’t l...
I noticed recently there have been some significant repair bills coming through as the age of my buy-t...
“To furnish or not to furnish your rental property, that is the question” The dif...
‘Rent to rent’ sometimes known as rent2rent is the latest get quick scheme dreamt up by th...
What are tenancy renewal fees? A tenancy renewal fee is ostensibly the charges made by the le...
Cleaning Deposit Disputes between a Landlord & Tenant One of the most regular a...
If I had a pound for every time over the last 25 years of renting property and more recently running P...
Dates play an important part in a landlord’s life.    Pict...
Over the last two years, the property industry has seen an increase in the number of disputes between ...
Before you turn off thinking "oh yeah it’s another plug for  landlord insurance,"...
A vital part of being a successful landlord is to get the right tenant. In fact if the truth be known,...
For property investors, particularly first time property investors there a huge number of potential in...
BTL landlords are often portrayed as money grabbing, evil, exploitative beasts. We are accus...
How I started my property portfolio I started my portfolio back in the early 90's. We had jus...
INVESTORS CHECKLIST For potential property investors there is a huge amount to take...
We have spoken before about the life of a student landlord, but here's a little bit more advice for th...
Lease options are all the rage in some landlord discussion forums having usurped BMV or Below Market V...
Property gurus & experts The rise in the buy-to-let residential investment market has bee...
  Advanced residential investment strategies Buy-to-let investment is pretty st...
For landlords with residential investment property it’s rapidly approaching that time of year &n...
Since the introduction of the Tenancy Deposit Scheme (TDS) on the 6th April 2007 it has been a legal r...
It seems timely with the deadline for paying and submitting your self assessment t...
Lee Sharpe from TaxInsider.co.uk looks at the implications for property businesses considering incorpo...
This modern day ‘knight’ of the urban realm can be hero or cowboy depending on the one you...
I'm fascinated by 'financial engineering' and how every so often, quirks of timing cause financial opp...
Rental period confusion One of the most confusing aspects of let...
Caveat emptor for the non-linguists means ‘Let the buyer beware’.  Loosely translate...
Property Hawks Property Manager software is mainly designed for individual buy to let landlords to man...
Here we go again. The leaves are turning a riot of oranges & reds before we descend headlong into ...
Landlords could be forgiven for feeling a little brow-beaten. Over the last 12 months, we hav...
The Government have produced a new Section 21 Notice. We have updated the version of our free...
A number of users have contacted us to share their concern over the proposed tax changes in the Budget...
Is Landlords Boiler insurance worth it? Getting your boiler fixed can be costly for landlords...
Landlords looking for a buy-to-let mortgage will face more restrictive lending criteria in the future....
Cash Back Offer Landlords looking at taking out a buy-to-let mortgage want to look at the Pro...
The Chancellor has not been overly generous to landlords and the buy-to-let sector in his Summer Budge...
PM3s is the 4th generation of our Free Property Management Software. The software has been free to use...
Section 21 Notices are about to change as a result of the Deregulation Act 2015.  Rebecc...
Following the election result. many landlords are breathing a sigh of relief.  Economic stability...
Landlords should be fully aware of the importance of being adequately insured. I know it's a pain to s...
Taxing Concerns for the Buy-to-Let Market The UK’s property market was given an unprece...
I hate change and regulation.  Most of it is badly thought out, counter productive & pointles...
The latest legal case to unsettle the traditional certainties of a landlord’s world is the case ...
Private Rental Sector – Party Policies The big day approaches and finally it will be yo...
Changes that came into force this week (6th April) (see for instance http://www.bbc.co.uk/news/business-32087038) now allow many ...
When selective landlord licensing was introduced  by the Housing Act 2004 it was intended to be a...
My small claims court experience My case came about because my tenant stopped paying the rent...
Rents are rising. Great!  According to the Rentindex they are up over 2.5% over the last year. ...
My tenant has always been an exacting type but it's now getting beyond a joke. Every few week...
Most landlords know that they need specialist landlord insurance.  Why? Because household policie...
It's been a while since I've sold one of my buy-to-let properties, but the potential of a new buy-to-l...
Christmas is a time for reflection and after over 20 years in the landlord game I've seen a fair few c...
Landlords are never off duty.  Last week I was in the middle of a patisserie class of all things ...
Tenants are getting more politically militant! They are mobilising, pulling together, and forming grou...
After 12 years of owning and renting out a flat, the freehold landlord has decided they want to start ...
Refubish to let – finance is key 'Refurb to let' is the latest trend in buy-to-let acco...
The the referendum and the party conferences of the past few weeks have thrown politics back into the ...
We have warned landlords before about the purges on landlords. The cash strapped Revenue periodically...
My problem tenant has gone, and finally I have possession of my rental property. ...
What interest rate should a landlord charge on late rent payments? My problem tenant has fina...
Tenancy Deposit Scheme disputes Tenancy deposit disputes are a messy business, so we asked th...
My tenant has left - time to celebrate? This week I was greeted by a text from a friend/neigh...
Revenge Evictions –time to act? 'Revenge eviction' is a new concept to me .  It&rs...
Letting agent questions I’m just in the process of selecting a letting agent.  I&r...
Buy-to-let hotspots are the ‘talk of the town’ right now.  Clearly we are in some kin...
Letting agents are not the ‘favourite kids’ on the property block. Landlords tend to view ...
Landlords should get fixed up I have been eyeing the latest developments in the economy and t...
What are the new court fees for possession? The court fees for landlords obtaining possession...
What are my allowable expenses? I’ve been contacted recently by several landlords who w...
Solicitors are costly. I'm all for landlords using their initiative and avoiding paying unecessary pro...
Section 21 notice dates – where are we now? Rebecca Brough our resident expert from Fid...
People frequently ask me what is my biggest tip on how to be a successful landlord. The answer is simp...
Not all our users realise that having signed up to our website they are FREE to start using our Proper...
I've been hit recently by a range of maintenance issues on my buy-to-let portfolio, including a number...
We are just a couple of weeks into 2014, so I thought I’d take a look at some of the best deals ...
OMG!  It's here again.  The ‘bloomin’ personal assessment tax deadline looms lar...
It looks like ‘Austerity’ …..‘Prudence’s’ long lost sister is on ...
The Section 21 Notice has not been the easiest of things for landlords to get right. Using the right o...
In the week that the Land Registry released historic data going back 18 years, I thought I would share...
Rebecca Brough solicitor at Fidler and Pepper highlights the potential dangers and consequences of the...
It appears that landlords are starting to fight back over unfair licensing charges by some local autho...
Access to finance is key When I started as a landlord the key for me was access to ...
Prospective property investors thinking of dipping their toes into the residential property market, or...
Longer tenancies?  Sounds like bliss to most landlords. Most of use love the thought of long-term...
The section 21 notice is a powerful tool. It is the one document that gives a landlord the certainty o...
When is a landlord not a landlord? Well the obvious answer is when they are a leaseholder.  ...
Creeping landlord licensing is on its’ way affecting many landlords.  A perfect example is ...
I was talking to one of the waitresses in my local.  She is so excited! She’s ...
Tenancy agreements are our thing.  We have been providing a free tenancy agreement to the landlor...
The latest projections see no immediate end to the long run of low interest rates.  This week Mar...
Our Property Manager software has come on leaps and bounds since we first developed it as free propert...
In these tough financial times some landlords may be looking at how they can pull in a few extra quid ...
The Government's latest proposals are to introduce a statutory obligation on landlords to check whethe...
Many landlords have been thrown into confusion over the last few months as tightening legislation and ...
I love being a landlord.  I’ve recently set up another new business.  I work ...
According to figures from the Dogs Trust, 46% of the population currently own a pet.  Now assumin...
Recently, I was talking to a new landlord about their first ever tenants.  They had been chuffed ...
Should I use a letting agent? The perennial debate amongst landlords is should I use a lettin...
Landlords who may be thinking about buying into purpose built student accommodation should stop and th...
Landlords are increasingly often under a time pressure. With the burgeoning regulatory requirements of...
Most of us ‘hard bitten’ landlords get fed up with the endless splurge of meaningless head...
Are rents about to fall? Landlords have been insulated from many of the harsh economic winds since the...
Tenancy Deposits – ESSENTIALS I’ve recently had a scare over one of my tenants de...
The queen is dead! Yes off course I'm referring to Margaret Thatcher.  Now she never sai...
Landlord Insurance Minefield My landlord insurance falls due this month.  As u...
We have frequently expressed opposition to a blanket landlord registration scheme - the ‘so call...
We’ve all had it - the phone goes, it’s one of your tenants’.  Do you:...
Better The Devil You Know?   I've recently advertised my rental property follo...
I was contacted this week by a fraught landlord who was the subject to a negligence claim from their t...
The buy-to-let mortgage market has gone from bust to boom again over the last few years.  With le...
This is a regular discussion point amongst many landlords.  Those that have been dissatisfied wit...
It's a landlords’ dread!   A nice respectable looking tenant, with a good...
Rebecca Brough of Fidler and Pepper Solicitors asks whether landlords need a tenant guarantor, and exp...
The thing with managing a portfolio of buy-to-let property is that for much of the time you don't have...
Brings Threats and Opportunities Many landlords are adopting a wait and see approach to the G...
Severe rental arrears fell by almost 16 per cent in the fourth quarter of 2012 according to data from ...
Should a landlord let their tenants smoke? Landlords are acutely aware of the bad smells and ...
New Year celebrations are well and truly over, so it’s back to work, and for many landlords, sma...
I was thinking today, what would be the top 5 things I would wish for next year as a landlord.  S...
You may think that as a landlord you are not liable for your tenants’ water bill. Well up until ...
I can't begin to explain how fraught the last few weeks have been.  Most part time landlords will...
The buy-to-let mortgage market has been in the doldrums for several years after the ‘crash&rsquo...
Rebecca Brough of Fidler and Pepper explores the world of fees and charges in respect to a landlords ...
Don’t forget your section 213 notice! Property Hawk has been urging landlord not to forget about...
You are just about to let your buy-to-let.  So what are the essential bits of paper work that you...
Is there such as thing as the ‘fair wear and tear’ of your buy-to-let property? ...
Landlords looking to obtain possession have two basic choices when trying to get their buy-to-let prop...
So it all goes wrong!  The tenant moves out (disappears) and owes you months of rent.  They ...
We recently had a enquiry on the Landlord Forum asking whether it was a good idea to serve a section 2...
Landlords seeking possession frequently have to decide between the merits of using a Section 21 notice...
Renewing a tenancy is one of the most straightforward aspects of managing a tenancy.  But many la...
Getting possession of a rental property when your tenant falls into rent arrears Th...
I read recently on a landlord forum a suggestion from one disgruntled tenant that landlords should be ...
My latest round of tenant gripes has hit me after a relatively quiet period. I suppose it was...
After launching the new version of the property management software we felt the actual site pages look...
Rental yields have always been a critical metric when evaluating a buy-to-let investment and they are...
Any landlord who follows London politics will not have escaped the fact that the private rented sector...
I was chatting this week to my joiner Steve. He was having a nightmare! Steve had done most o...
The Co-op announced last week that it was stepping up lending into the buy-to-let mortgage market by a...
Legislation should be in place by the end of the year to allow landlords to benefit from the Green Dea...
It's January which means only one thing for most landlords, yes it’s time to get to grips with t...
As the year comes to an end many landlords will be drawing up their plans for 2012. With the ...
I was contacted several weeks ago by one of our longstanding users. Kevin wrote to highlight ...
I'm like the majority of small landlords in that I have opted to use the Deposit Protection Scheme (DP...
Europe is at it again! Not content with their crazy project “Euro”  putting ...
You might be aware that I’ve had a number of new tenants recently. This has i...
It’s a great time to be a landlord. Many of us including me are making record rental pr...
I was contacted last week by a landlord looking to gain access to their bu...
I’ve written before about landlords not needing to use a letting agent. We al...
It's been a while since I've had a new tenant move in. The new tenant seems amiable enough. A middle a...
My landlord insurance fell due at the beginning of this month. DAMMM! Yet again the dilemma. ...
It is possible to get a company to fill out your N5B.  This will cost anything upwards of £...
Most landlords use an Assured Shorthold Tenancy agreement to let their property. So how long ...
I've been looking at some recent enquiries from landlords who use our Property Management software to ...
Most landlords who let a property that is tenanted will not be liable for council tax.  This is b...