The Government has said it will continue tenancy deposit schemes which currently hold over two million tenants’ deposits worth £1.88 billion altogether. It is the responsibility of the private landlord or lettings agents to place tenant deposits in a special protection scheme.
There are currently three in the UK: Mydeposits, the Tenancy Deposit Scheme and the Deposit Protection Service. In November 2006, these three companies were awarded contracts by the UK government to run tenancy deposit schemes.
Housing minster Grant Shapps said: “Although some landlords continue to have reservations, the majority have found access to a free adjudication service under the schemes helpful in resolving disputes.”
Additionally, he said that tenants felt much more security knowing their house rent deposit was being held by a specialist company rather than an individual.
Due to the success of resolving disputes and the support both landlords and tenants have found by using a scheme, he said the Government will continue with tenancy deposit protection.
The existing agreements end in 2013 so new insurance schemes will be put in place at that time with the current custodial scheme in place until 2016.
The Tenancy Deposit Scheme, backed by ARLA and Mydeposits which is run by the National Landlords Association are insurance-backed schemes. The Deposit Protection Service is the custodial scheme run by Computershare. It’s funded only by interest gained on the deposits and holds the tenants’ deposits for free.