Sharp rises in subscriptions will kick in shortly for agents using the Tenancy Deposit Scheme, as a new charging system comes into force.
This will mean no more flat fees, with subscriptions varying from firm to firm. Exact details will be announced in January.
The changes are because of the huge rise in disputes having to be determined by the Alternative Dispute Resolution (ADR) service also offered under the scheme. As reported, all external case examiners, who are a mixture of freelancers and contract workers, have already been dispensed with. Altogether, some 70 posts were affected, leaving a team of just 12 case examiners in-house – despite the escalating number of disputes.
As a result, disputes are likely to take longer to be resolved, although a spokesman for the scheme said this may not necessarily be the case.
Subscriptions for agents will now be determined on what the scheme describes as a fairer basis, which will reflect individual firms’ use of ADS.
John Hornsey, chairman of the board of The Disputes Service, which runs the TDS, said: “We are moving to a charge which will be based on the number of live tenancies and with discounts and uplifts to members that will reflect the number of cases referred. We shall base our calculations for subscription increases on this method.”
The board says that under the new system and despite the likely severity of the subscription increases, letting agents registered with TDS will be able to control their costs of deposit protection and still be able to off-set the cost. That is because scheme rules and the legislation allow agents to pass on the cost to landlord clients.
“This major change in the method of charging also means that agents should start checking their own tenancy schedules sooner rather than later to ensure that all tenancies that have ended are also closed on the TDS database.
“Under this new system it will be the agent’s responsibility to ensure that they are only charged fees on live tenancies,” Hornsey added.
Authorising the principle of a significant rise in subscriptions, the board pointed out that TDS is a not-for-profit organisation and that the very substantial rise in the number of disputes will reach a level that is well above the resources available to the scheme if
subscription income does not rise in proportion.
In many cases, the board said, disputes could, and should, be resolved directly by members, out of petty cash if necessary.
For instance, it was felt that it could not have been worth the postage, let alone the letting agent’s time, to refer a dispute of £4.20. Yet this has happened.
TDS chief executive Lawrence Greenberg said: “The £4.20 dispute is the lowest so far but we have had many for not much more.
“This kind of misuse of the adjudication process is the overwhelming reason why the cost of dispute resolution has increased by nearly 100%. This, more than any other cost increase we have experienced, accounts for the level of subscriptions we will have to consider for next year.”
However, Greenberg added: “Given the divergence in the way disputes are put forward by different firms, it is likely that the new rates will be much fairer as they will be set at different levels based on the past history of a firm’s demands on Alternative Dispute Resolution.”
Comments
Agree with Steve from Leicester. We also play hard ball over deposit disputes, and tell both parties that we do not use ADR as a matter of principle, only the county court if matters cannot be mutually resolved. We have had three potential disputes, all of whom preferred to negotiate than go down the court route. They sign a disclaimer and the matter is settled. So far we have a 100% record of never having to lodge disputed sums. As a bonus, it has saved us mountains of paperwork.
Why don't more agents do what we do to minise TDS referrals? When landlord and tenant disputes arise, we put forward what we think is a fair and reasonable proposal - and point out that if both parties agree we can write them a cheque "now". The "bird in the hand" approach settles an awful lot of disputes.
I don't use the TDS to adjudicate unless it is for rent arrears. Any other claims the Landlord cannot win with the TDS, even with inventories, photos, statements by contractors and us. The TDS informed me recently the only way they accept the inventory is if we have a signed move out inventory too. If a tenant has done no damage they are only too happy to sign this, if not signed you have no chance. I advise my Landlords to go to court and help them with the evidence they need. If tenants had to pay for this service then we probably wouldn't need the TDS at all.
I'm sure we can expect a hike in basic subscription costs regardless of how many disputes we lodge. I hope I'm wrong though! Lets try to see the positive side.....the TDS should be able to deal with simple disputes immediately and not take 4 1/2 months. Maybe they'll be able to read their emails and reply within 10 days. Maybe if we phone them, we will be able to speak to someone who knows what they're talking about. Maybe we will actually get the service we deserve for the amount of money we pay them!
Well siad Evelyn and others. We as Agents have had about 3 disputes arbitrated with mixed results despite solid evidential documentation. I only hope that any subscriptions are based upon performance so the TDS should set a 'Minimum Claims Threshold' to stop laughable £4.20 claims being allowed into the system and 'loading' and agents record. I would like to see any claim below, say, £75 to be allowed but with a the caveat that if found in favour of the Agent/Landlord then the tenant must pay an administration charge for arbitration time; this may end the 'ability' to dispupt normal proceedings by tenants because they can.
Sorry I made a mistake we try to protect Landlords and tenants, not agents
The TDS Scheme rise in costs yet again. As Agents we pass on the cost to landlords however there is a limit to how much the landlords will bear, therefore there will be more landlords who turn to private renting and take a deposit under another description and not registering it. This then once again gives the tenants who this is supposed to protect no come back. This system is going to end up being farcical as it will turn things back to some private landlords doing what they like.As agents we try to protect both Landlords and Agents but the TDS is solely for tenants, maybe the cost of disputes should be shared and the tenants pay towards this.
TDS - not for profits? right - so we can't chllenge their charges under the Competitions Act! It all stinks. Another knee jerk law from the govt, aimed to "protect" tenants! What a joke
If we cant get agreement from the Landlord & Tenant on the distribution of the deposit then they may take the course to go through the TDS, we will not do it on there behalf. Its all very well Greenberg saying that agents should pay minor claims out of petty cash but when/if you are doing thousands of lets a year and each or even a fraction of the tenants decide to dispute £5 or £10 then it adds a big minus to the Agents profit and loss. if it is more cost effective to do it this way why doesn't the TDS pay the disputed amount out of their petty cash?????
In addition to this if a Landlord does not authorise us to return a tenants deposit or part of, if we give the tenant back the disputed amount even out of our own pocket that leaves us open to accusations of not carrying out our Landlords instructions.
The main failing of the deposit dispute services is that there is no charge to the tenant for referring the dispute to the TDS, DPS, etc.
What incentive is there for the tenant to reach a settlement?
There is very little point disputing the return of a tenants deposit for any reason.
We had one where the tenant caused damage. We had an inventory of condition and final inspection photo's and bills for repairs.
Two months after the dispute paperwork was sent to TDS they ruled in favour of the tenant.
90% of the time the ruling will go in a tenants favour.
Why? It is difficult for a landlord to prove loss even if there is one.
I went to court on behalf of a landlord years ago in a similar case and the judge ruled that the landlord could not prove loss because all losses were tax deductible.
Therefore the tax man suffered loss but not the landlord.