Tug-of-War Over Deposits Resolved
The aim of Tenancy Deposit Scheme for Regulated Agents (TDSRA), due to be implemented this month, is to resolve deadlocked tenancy disputes over the apportionment and settlement of deposits following the end of a tenancy.
Upon implementation, the Scheme is likely to have a significant effect on landlords’ decision to let their property.
The advantages of the Scheme are: -
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Protection of the deposit money during the period of the tenancy;
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The deposit will be returned at the end of the tenancy, as normal, where there is no dispute;
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Where there is a dispute, the issue will be referred to the Independent Complaints Examiner (ICE) for expert independent adjudication.
When?
The introduction of the TDSRA has been postponed until April 2007. However, it is important to note that from this date, all letting agents will be obliged to sign up to the Scheme. They will be required to pay an annual subscription charge based on the number of offices they have. Currently the fee is £312+VAT per office per year. The service is free for tenants.
Who?
In order to benefit from the Scheme, you must be a “regulated agent”, i.e. -
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A Member of Association of Residential Letting Agents (ARLA), the Royal Institution of Chartered Surveyors, the National Association of Estate Agents; and
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Covered by a recognised bonding scheme which protects and insures money held on behalf of landlords and tenants.
How?
New clauses about the Scheme will have to be added in to all Tenancy Agreements.
Once a tenant signs an agreement and pays the deposit, the letting agents will hold that money in their account.
If there is a dispute over the deposit at the end of the tenancy, then any of the parties – the Agents, the landlord or the tenant – can refer the matter to the ICE. This must be done within 28 days of the end of the tenancy. Through an adjudicator, a decision will be reached for a fair and reasonable apportionment of the deposit money.
Problems?
The dispute over how much of the deposit should be returned to the tenant would lie in the hands of a third party who would have to distinguish between damage caused by the tenant (which can come out of the deposit), and damage caused by reasonable wear and tear (which cannot).
Problems may arise in respect of what is considered to be ‘reasonable wear and tear’ as opposed to actual damage.
However, the adjudicators are trained professionals, for example lawyers, surveyors, rent officers and architects. They will reach an impartial and unbiased professional decision.
So?
It is vital that all landlords and letting agents become aware of this new Scheme in order to prepare for it before it comes into full force.
Members of our Landlord & Tenant team will be able to assist you with any queries you may have about the Scheme and its possible implications.