How many TDS Deposit Protection Insurances are no longer valid?

How many TDS Deposit Protection Insurances are no longer valid?

18:20 PM, 19th December 2012, About 11 years ago 31

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The Dispute Service “TDS” recently posted on this website “TDS members need to log in to their account online and tick a box updating it to statutory periodic ( instructions are available in the Website User Manual). If you do not do this protection will end on the original end date of the agreement. We do advise that you also send the updated certificate to the tenant so they know their deposit is still protected.”

How many of their members are aware of this?

It clearly states this on their website but how many of their policy holders think to go back and check to see whether Terms and Conditions have been changed?

Earlier today I asked TDS “please advise what percentage of your members extend the protection when AST’s become SPT’s? My reason for asking this question, and my concern, is that most landlords and letting agents will not realise that this is a requirement of your scheme and the deposits will not be protected after the initial fix term. This is VERY worrying given that, for many, the 30 days will have expired, the consequences of which are the potential of being fined 3 X the deposit plus, having to return the deposit and no right to serve a Section 21 notice until the deposit has been returned, regardless of any damage that has been caused.”

No such conditions arise with the other two deposit protection scheme providers who have commented as follows:-

MyDeposits“With my|deposits a protection remains valid in the event that a fixed-term AST reverts to a SPT. The member does not need to formally confirm the SPT extension with us nor do they need to re-issue the DPC or PI.”

DPS – Deposit Protection Service“we do not need to be informed if a tenancy reverts to Statutory Periodic. This is the same for Enlgand & Wales & Scotland”

It appears that the scheme providers believe that legislation supports whatever the scheme rules are – however, this has yet to be tested in a Court of Law. Section 5 of the Housing Act 1988 clearly states several times that a Statutory Periodic Tenancy is a new tenancy. If this is proven still to be the case in a Court of Law it stands to reason that a judge could also rule that all deposits must be re-protected at the end of a fixed term tenancy. That would be VERY messy!

My concern, based on the response from The Dispute Service “TDS” , is whether their rules have been effectively communicated. I don’t think they would pass the test of a judge whom, if this ever gets to court, is likely to ask whether the rules are “clear fair and not misleading”.

From what I can see TDS updated their website early this year to effectively say that a deposit protected under their scheme becomes unprotected at the end of the fixed term unless they are notified. That could affect a lot of their scheme members in England and Wales if they are unaware, especially those who didn’t advise them of AST reverting to SPT’s within the prescribed 30 days.

If TDS procedures were to write to all members, before the end of the fixed period, asking them if they wanted to extend cover, I think TDS would have a good defence against any class action from affected landlords.

Could this result in litigation from both landlords and tenants?

What happens to a tenants deposit if a landlord or his agent goes bust if TDS procedures have not been followed? 

UPDATE

This statement of clarification has now been provided by the TDS and comments on this thread have been closed.


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Comments

Chris Sheldon

11:01 AM, 21st December 2012, About 11 years ago

I’ve only ever had experience of using the TDS and the above I was not aware of and I
imagine that there are a lot of deposits which are now not protected. I know that at the last agency I worked with there will be 100+ deposits which are no longer protected.

Prior to reading this article I had just registered with the DPS because of the ability to internally transfer deposits between agents and after reading all the documentation, not only does the system appear to be a lot easier to use the dispute resolution procedure makes a lot more sense than the rather cumbersome way that the TDS carry this out.

If you couple this with the cost, which is free, compared to the TDS’s rather odd pricing structure I will 100% be using the DPS in the future.

I’ve always had issues with TDS from billing to the system and I really don’t know why anyone would consider using it other than it is recommended by ARLA, RICS etc.

11:33 AM, 21st December 2012, About 11 years ago

Mark, when did you ask MyDeposits about this? In their last two newsletters they have notified members that they will be introducing this requirement too! I have responded to them twice - the first time I was simply referred back to their newsletter (Completely ignoring that my questions/concerns where about the contents of that newsletter) and the second time they have not responded at all!

This requirement is simply ludicrous and just adds more admin to an already time consuming process. As I commened to MyDeposits, if a tenancy ends I inform them and release the deposit and if the tenancy is renewed then I re-protect the deposit. Clearly by doing neither of these things, the tenancy must by definition be in periodic so why do they need me to tell them so? I cannot see how this has ever created a problem for them or more importantly for a tenant. Its all a load of nonsense.

As has been stated elsewhere in this thread what happens if I forget to do this? There is no trigger as nothing changes. I pay a lot of attention the the requirements of deposit protection (As any Landlord or Agent should of course) and it just seems like the intention of these schemes is to try to make me fail in my duties instead of helping me to comply. What happens - I no longer have a protected deposit, simple as that. It certainly reduces the demand on their ADR resources which may be the real reason behind it!

Mark Alexander - Founder of Property118

11:54 AM, 21st December 2012, About 11 years ago

I asked and they replied on 19th December 2012, as did DPS. Please see official Tweets from both organisations which are embedded into this post >>> http://www.property118.com/index.php/do-i-need-to-re-protect-my-deposits/34777/

I am aware that a lot of agents are seriously considering a switch to DPS. I've received a lot of emails and phone calls from agents who have never received reminder emails from TDS despite their assurances that they email two months before and again one month before the expiry of the fixed term.

12:35 PM, 21st December 2012, About 11 years ago

Ah terminology!

The response from MyDeposits was accurate. You do not need to 'Re-Protect' the deposit (Which would be at additional cost) but you do need to advise them and log it on their system that the tenancy has turned periodic.If you do not the deposit will be automatically unprotected. I have attached a screenshot of their repsonse to me.

As you say, I think the DPS will be getting more business now however my experience of their dipsute procedures is not very reassuring. All a tenant needs to do is fail to respond and the DPS locks the money away forever - or until you get a court order to make them release it.

Have a great Christmas.

Ray

Mark Alexander - Founder of Property118

12:44 PM, 21st December 2012, About 11 years ago

Now this is even more worrying as that's not what they said @mydeposits here >>> http://disq.us/8bzm9a

12:58 PM, 21st December 2012, About 11 years ago

Yes, I just noticed that response from them 2 days ago that you link to!

As you say, it is really worrying as when you talk to these people on the phone none of them give you any confidence that they know what they are talking about. Thats why I always ask for things in writing although as we can see here that does not really help either. Do we take that response you link to as accurate and quote it when things have gone wrong? Somehow I dont think that would work. These people need to get their act together or have their licence to run these schemes taken away.

13:09 PM, 21st December 2012, About 11 years ago

my|deposits has recently notified members of new features to their online accounts, making it easier to manage deposit protections. This includes a renewal button to enable faster protection renewals, removing the need for re-entering existing information about the tenancy. The changes will only make it easier to update the status of protections when either renewing a deposit or if the tenant leaves. Merry Xmas all!

Mark Alexander - Founder of Property118

14:14 PM, 21st December 2012, About 11 years ago

HERE, HERE!

I'm bloody furious.

My business may now be in jeopardy. The scheme providers websites are full of disclaimers too. Whether those disclaimers are valid is now questionable.

I'd like to think their disclaimers are no more valid than if I were to put disclaimers in my AST’s saying that I accept no responsibility for the safety of my properties. Surely a judge would see it this way too. Whatever disclaimers these schemes may use, surely they have a duty of care to make their communications "clear, fair and not misleading". In my opinion they are failing miserable on all counts.

15:50 PM, 21st December 2012, About 11 years ago

It seems mydeposits have failed to provide clarification in black and white.

Maybe you should merge the two posts and contradicting advice from them to avoid confusion.

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