April sees the launch of two additional deposit scheme options for landlords. This launch will allow landlords a choice of three schemes in total including two custodial schemes instead of just one as was previously the case.
By law landlords of assured shorthold tenancies in England and Wales must protect deposits they receive from tenants within 30 days of receipt.
Before April, the Deposit Protection Service was the only custodial scheme provider. Now, all providers offer both custodial and insurance based schemes.
What is a custodial scheme?
Custodial deposit schemes protect tenants’ deposits without the landlord or agent having to pay a fee for the duration of the tenancy. The deposits are protected from the moment they are submitted to the end of the tenancy. These custodial schemes hold an amount equal to the deposit paid in and are funded by the interest earned on each deposit.
The difference between a custodial scheme and the original insurance backed schemes is that deposits are not retained by the landlord or letting agent but submitted to the scheme providers and it is also a free service unlike the custodial scheme where a fee is charged per deposit.
With TDS and My Deposits now offering custodial schemes alongside the insurance backed schemes, both agents and landlords will have more choice when it comes to meeting their legal obligations to protect their tenants’ deposits.
“This move is important for landlords, letting agents and tenants because for the very first time there will be a choice between custodial deposit providers. As the longest serving chief executive officer of all the deposit schemes, I’ve seen first-hand how tenancy deposit protection has helped raise standards” says Eddie Hooker, mydeposits CEO
For more information on tenant deposit schemes and any of the landlord services we offer at countrywide please visit our website.