8th
May 2015
Increasing numbers of lettings agents are up in arms about insurance backed tenancy deposit schemes and want all MPs to banish them from the industry.
An estate agent body states that the schemes are bad for the industry, as they can potentially hoodwink both tenants and landlords into thinking that their deposits are properly protected.
It claims that there could be cases arising when agents just decide to leave the scheme, which would mean that the deposit insurance would become worthless and could make deposits ‘vulnerable’.
The worst possible scenario is that an agent ceases to exist, becomes bankrupt etc, there would be the distinct possibility of all deposit funds being held for clients, would be lost.
There have been stories of cowboy companies that have enjoyed lavish lifestyles and helped their cash flows through tenants’ deposits.
New legislation has certainly improved the protection of tenants’ deposits, however the industry is calling out for stronger safeguards to be introduced by the government....and quickly.
Michelle Hodge of an agents’ group said: "The custodial Tenancy Deposit Scheme (TDS), which is mandatory in Scotland, is the only way of truly safeguarding tenant deposit funds from any such dangers."
The Scottish system allows agents to have the power to change scheme providers; it also means that landlord can likewise change agents without jeopardising the deposits, as they would be kept in separate third party bank accounts.
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