All three of the tenancy deposit protection schemes have financial guarantees in place, a question and answer session in the Commons has revealed.
A spokesman for Mydeposits confirmed that as part of the Government contract, Hamilton Frazer and the National Landlords Association had to sign a bond to the tune of £500,000. The other two schemes were touchy on the subject.
The RICS refused to comment on rumours that it has underwritten the TDS for the same amount.
The third scheme, the DPS, owned by Computershare, also refused to be drawn. Yesterday, a spokesman for DPS said: “We are not going to comment on the other schemes or what they are saying on this issue. In fact we are not aware of a Parliamentary Question specifically about underwriting and this information is commercially confidential and any questions on it should be directed to DCLG in the first instance. This is all we are prepared to say.”
This was the Parliamentary question and answer session, which also makes it clear that none of the schemes is allowed to charge ‘directly’ for resolving disputes.
Ian Austin: None of the three Government-approved tenancy deposit protection scheme providers are permitted, under the terms of their contracts, to make direct charges for their alternative dispute resolution services.
Grant Shapps: To ask the Secretary of State for Communities and Local Government what assessment he has made of the financial viability of each of the authorised tenancy deposit schemes, and whether his Department has responsibility to ensure the financial viability of such schemes.
Ian Austin: The three tenancy deposit protection schemes are operated by private companies under contract with Communities and Local Government and are designed to be self-financing. All the contracts contain safeguards to ensure the financial viability of the schemes.
Grant Shapps: To ask the Secretary of State for Communities and Local Government when each tenancy deposit scheme provider’s contract expires.
Ian Austin: The Department for Communities and Local Government's contracts with the three tenancy deposit protection scheme providers for the provision of tenancy deposit protection schemes will run until the end of March 2012. All three contracts have the option of a further one-year extension.
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Comments
The RICS £500K bond, if it exists, is unlikely to make a great deal of difference if the recently projected figures are to be believed. If the rumoured dispute volumes for 2009/10 of circa 15,000 are correct, then the estimated dispute cost for the year can be projected to be £5.75m against income for the period thought to be no more than £3m. Crude though the calculations are, if the shortfall is £2.75m, and a significant proportion of users switch to one of the other two suppliers, as is expected, then those that have already committed must feel increasingly vulnerable.
So that's alright then. Could the lack of comment from the RICS over the outrageous hike in TDS fees be in someway influenced by the financial guarantee they may or may not have given to the TDS? Keep the smoke and mirrors going guys