Deposit transfer process branded a “sham” by landlord

A landlord has slammed the tenancy deposit system after being told he cannot deregister a tenancy deposit while selling one of his rental properties, describing the process as a “sham”.

Mick Roberts, the largest landlord of benefit tenants in Nottingham, is selling one of his houses to a new landlord.

As part of the sale, he wanted to deregister the tenancy deposit before responsibility passed to the new owner.

However, issues began after mydeposits moved its insured scheme onto Total Property so landlords can manage insured and custodial tenancy deposits on a single platform.

The firm said the overhaul, its largest investment in insured deposit protection since 2007, would make it the only provider offering both services through one customer system.

Can’t control what the new landlord does

Mr Roberts told Property118 he faced long wait times before he was able to speak to someone at the deposit scheme about problems using the platform and, at one stage, found himself 95th in the queue.

When he eventually got through and explained that he wanted to deregister the deposit because the property was being sold, he says he was told it was not possible.

Mr Roberts was initially told to use a “Transfer” option within the portal.

However, after saying the button did not appear, he was informed the system was undergoing IT fixes.

It’s a “sham”

Instead, he says he was then told that the deposit could only be deregistered once the new landlord had re-protected it and sent proof of the new registration.

He told Property118: “I can’t control what the new landlord does. I can’t deregister if the new landlord doesn’t send me anything.

“They are telling me I need to send proof of re-protection from the other landlord. This whole process relies on the new landlord doing the correct thing. What a sham.”

The news comes as the government has hinted at axing insurance-backed deposit schemes because of fraud fears but the plans are not yet law.

The move would see landlords and lettings being unable to hold tenant deposits in their own bank accounts.

Transfer option was temporarily unavailable

When contacted by Property118, Tim Frome, head of government schemes at mydeposits, said: “As a government-authorised tenancy deposit scheme, we have a duty to check why a member is ending deposit protection.

“Where a landlord has sold the property and a new landlord has taken responsibility for the tenancy and deposit protection, we have a transfer protection option. This is a self-service option where the member can simply upload proof of the transfer of tenancy, which one of our team will then check before confirming the end of the existing protection. This is our standard process and is not specific to this case.

“If a member does not wish to follow that process, they can also use the usual unprotection option. However, this is intended for ending a tenancy, so it opens up the possibility for the tenant to raise an end-of-tenancy case with us. The tenant would need to have vacated the property to raise a case, so if they attempted to do so while still living there, the case would not be accepted by one of our case assessors.

“The transfer option was temporarily unavailable due to planned maintenance while we transferred insured-backed deposit protections onto our new platform. This was communicated to all members in advance, and the transfer option is now available.”