I have now visited and done interviews with all three of the companies running the new Tenancy Deposit Protection schemes, due to come into force on 6 April, so am in a position to say a bit more about them.
The company running the Custodial scheme is Computershare Limited, a large multinational firm. They have set up a company called The Deposit Protection Service Ltd to run the scheme, which has a web-site here. Their scheme is free but involves the landlord handing over the deposit for them to hold, and their costs come out of the interest on deposits held. They have been running a similar scheme in Victoria, Australia for the past eight years, where they tell me, their custodial scheme is the only one. Apparently landlords moaned a lot when it was set up, but now take it for granted. They feel fairly sure that the same thing will happen here. I think that their web-site is pretty good and I suspect that they will run an excellent service.
There are two companies running Insurance based schemes. These are where the landlords get to keep the deposit but have to pay the scheme administrators for the privilege. They are both different, one is aimed largely at landlords and the other at agents.
The landlords scheme is run by Tenancy Deposit Solutions Limited which is sponsored by the National Landlords Association with Hamilton Fraser, and has a web-site here. Theirs is a pay as you go scheme. Landlords will have to pay a joining fee of £58.75 and then £30 per deposit. National Landlord Association members pay slightly less at £47 and £26. There is an annual renewal fee of £14.70. There are slightly different fees for agents, accredited agents paying less than non accredited agents. Note that it costs £83 to join the NLA, with a few variants.
The final scheme is run by the Dispute Service Ltd, whose web-site is here, and is aimed mainly at agents. The only fees announced at the time of writing this are for agents. These run from £521 for agents who are members of ARLA, RICS etc to £1,609.00 for unaffiliated agents, with a few variants inbetween. However once this fee (which is an annual fee) is paid, the agent can register as many deposits as he wants. So the more deposits are registered, the cheaper overall this scheme will be.
It will be interesting to see how the insurance based schemes go. I know that there is a huge amount of interest in the Dispute Service’s scheme, plus they already have an existing client base as they formerly ran a voluntary scheme for letting agents, and these firms will be passported through into the new scheme.
The National Landlords Association has, they tell me, over 12,000 members and I suspect that many of these will be using the NLA scheme. However other landlords associations appear to be boycotting it, and going for the Dispute Service scheme. I am not sure whether this is because they consider the Dispute Service will run a superior service or whether it is because they do not like the NLA. However it is likely that the NLA will do quite well out of this and will probably pick up a lot of new members, to the fury no doubt of the other landlords associations!
However I suspect that for the smaller landlord, the cheap and easy custodial scheme will be the most attractive, as it will not involve any cost. For if the property has good tenants and no recourse is needed to the deposit, then there is no need for the landlord to incur the additional expenses involved in having the deposit money in his bank account rather than the scheme administrators bank account.
Certainly the custodial scheme will be the most attractive one for tenants, as they will know where their deposit is. The NLA told me that if the landlord fails to pay the deposit over to them in the event of a dispute, the tenant will have to get a county court judgment (as opposed to going to arbitration) before they will pay anything over to them, which I suspect will not please tenants. I also suspect that this comment may not accord with the regulations, but we shall see.
However if you are a landlord, you should, fairly soon, read the information on the various scheme administrators web-sites, and register with them to receive more information. And then make your choice.