Price war breaks out on tenancy deposit protection

The starting gun has been fired in a war of words on the cost and quality of mandatory tenancy deposit protection.

This week, The Dispute Service (TDS) warned of the ‘likely severity’ of price rises in the New Year because of escalating costs due to a larger number of disputes than it had budgeted for. TDS has already dispensed with the services of all 70 of its external case handlers, and despite the growing number of disputes, all will now be handled in-house by a team of just 12.

However, today its competitor Mydeposits sets out its stall for agents.

Whilst originally designed for landlords – it was launched by the National Landlords Association – the scheme said it would offer “more competitive deals” for letting agents and said there would be no compromise on quality.

Eddie Hooker, chief executive of Mydeposts, said: “This latest decision by TDS will hit letting agents hard just when they don’t need it.

“We also have to question how the decision to bring all adjudications in-house will affect tenants and landlords with the quality of adjudication they receive in dispute cases.

“With all disputes dealt with in-house, how can we be sure of impartiality? TDS looks as if it is trying to cut costs at the same time as increasing subscriptions – a double whammy.”

He went on: “We will continue to offer the same high levels of service, quality dispute resolution by external adjudicators, and a robust pay-as-you-go pricing structure which is standing the test of time. This will not be changing. Obviously, we are happy to hear from letting agents who feel TDS can no longer offer them the quality service they require.”

Meanwhile, more fireworks are expected over how well the law on tenancy deposit protection is working.

It is understood that Communities and Local Government, the Whitehall department responsible for policing the legislation, is looking at a series of questions, including whether it should be concerned if any of the schemes have missed performance goals.

Known as Key Performance Indicators, these were set by CLG when the schemes were awarded their initial three-year contracts, which are due to end next April.

It is believed that KPIs relate to such matters as time spent to resolve disputes.

Apart from KPIs, there is on-going concern that an overwhelming number of disputes appear to have been settled in favour of the tenant, and that there is little to stop letting agents trying to keep their businesses going by dipping into deposit money which – quite legally – they have kept after insuring it with one of the schemes.

In such cases, it has emerged that landlords who are entitled to the deposit money have no claim on it because, as Mydeposits has pointed out, the legislation was designed to protect tenants and not landlords.