TDS – repaying the deposit

As all landlords should know; since the 6th April 2007 any landlord taking a rental deposit is required to use one of the three government’s approved Tenancy Deposit Schemes.

One of my tenants has recently moved out so it has now fallen on me to repay their rental deposit.

I use the custodial deposit scheme operated by the Deposit Protection Service.

Generally I found it pretty convenient and unlike the two insurance based schemes it’s free to use. What’s more a landlord prior to interest rates dropping through the floor could have made a little interest on the deposit monies. This is because any margin of interest above 2.32% (the charge used to fund the service) is returned either to the landlord or tenant. The Property Hawk tenancy agreement specifies that the landlord retains the interest.

The initial payment of the deposit and repayments of the tenants deposit can all be conducted online through the website which I find particularly useful.

Repayment process

The process of repaying the tenant’s deposit requires a six stage process:

1. Landlord logs in to the deposit protection scheme website & selects the rental deposit to be repaid.
2. Then you as the landlord have to identify whether the lead tenant is present with their repayment ID to hand.
3. You as the landlord will then need to specify how much of the deposit is to be repaid.
4. Identify which bank account you wish to make the repayment from and whether you or the tenant should retain the surplus interest.
5. You will than be requested for a forwarding address for the tenant.
6. Finally, you will need your repayment ID. This is NOT the deposit ID or agent/landlord ID but a separate ID that was sent to you by the Deposit Protection Service when you initially protected the deposit. The email has the title: DPS deposit protection confirmation

The DPS then responds by informing you that the repayment proposal has been successfully submitted and that they will seek agreement from the tenant to agree or disagree with it. If they fail to agree the deposit becomes a disputed deposit. If the tenant agrees they will make the repayment within 5 days of receiving the tenant’s response.
View of the Tenancy Deposit Scheme

After being initially sceptical of the TDS I’m generally in favour.

I’m fiercely resistant against regulations as any regulars to Property Hawk will appreciate. This is because most regulations are overly prescriptive, fail to deliver and end up costing lots to administer. I’m of the view that the benefits to tenants and the private rental sector of the TDS marginally outway the bureaucratic hurdles now required to administer and repay tenants deposits.

However, my recent experiences just highlight the problems with any prescriptive system of regulation and how ultimately, systems can end up getting in the way of common sense. The result being that it’s more work for both the landlord and tenant and both end up being inconvenienced by a system supposedly their to protect their interest.

My experience

I have a tenancy that has come to an end.

The young slightly disorganised tenant was moving out and the next day was flying off to France to work. I arranged to meet the tenant to carry out the check out.

In pre Tenancy Deposit Scheme days I would have paid the tenant back there and then, after deducting any outstanding rent from the deposit with either a cheque or cash. I would have also in this case made a deduction of £55 for the oven clean done through Ovenu and probably knocked off a few quid for the state of the carpet which needs to be replaced because of various stains despite being less than 4 years old. Job done!

However, under the Tenancy Deposit Scheme now after first logging on to the Deposit Protection Schemes website; I then discovered I needed the tenants forwarding address. Several texts later I received these details. Given the tenant had probably left some outstanding utility bills and was living on a French campsite. He seemed less than keen on providing me with these. Eventually I got them.

Finally, several weeks on I can pay the tenant their deposit back. However, the tenant will still have to agree the deduction from their rental deposit and only then will he receive the money within five days of agreeing the details of the return of the tenancy deposit. Many tenants can’t wait that long and require funds instantly.

Now from my point of view I’ve wasted valuable time jumping through the hoops to get the tenant their money back. The tenant no doubt thinks I’ve been a typically unhelpful landlord and by now is probably desperate for cash.

Drawbacks of regulatory systems

What policy makers and bureaucrats need to appreciate is that systems in terms of regulating the buy-to-let sector have to be carefully evaluated to weigh up the real need for them against the obvious extra time and costs to those involved.

Landlords in recent years under Labour have been hit by a barrage of regulations all of which in my view have done nothing to improve the quality of private rental accommodation or the experience of landlord or tenant working within it. The changes in my mind were always more about political symbolism of a Government who wished to appear to be actively shaping the conditions in the private rental sector whilst in reality burdening it with badly conceived controls.

I hope that Grant Shapps the new Housing Minister is listening.

For more on this read An arbitrators view on Tenancy Deposit Disputes.

Landlord insurance quotes