TENANCY DEPOSIT SCHEME IS IN TROUBLE - SAYS RLA
The Residential Landlords Association - whose members own over 100,000 private rented properties throughout the UK - is calling for an independent enquiry into the handling of tenancy deposits.
The demand follows a revelation that The Dispute Service, one of the three tenancy deposits schemes, has been forced, by a huge workload and escalating costs, to make 80 per cent of its external arbitrators redundant.
“The job losses mean that disputes will inevitably take longer to settle, which the RLA considers unfair on both tenants and landlords,” says chairman Alan Ward.
Mandatory tenancy deposit protection was launched in April 2007 when the government approved three independent arbitration schemes - Tenancy Deposit Solutions, The Dispute Service (also known as The Tenancy Deposit Scheme) and The Deposit Protection Service.
“We are puzzled that The Dispute Service has had to take this action, when disputes going to arbitration represent less than two per cent of deposits held,” says Alan Ward.
“A second concern is that we gather from another of the schemes that a large majority of disputes are settled in favour of tenants - whereas the schemes were widely promoted by the government as delivering equally even-handed protection to landlords.
“We would now like to know if all three schemes will have their contracts renewed at the end of April 2010, when the initial three-year period is up, or whether the government will allow them all to be automatically extended to five years.
“The Dispute Service is rejecting a considerable number of requests for adjudication on technical grounds. This cannot be justified. Tenancy deposits are routinely returned in full to tenants even though landlords have valid claims against their tenants. They are using a pro forma letter which is artificially keeping their work load down.
JOB LOSSES
“The RLA understands that four in five of the 70 Dispute Service inspectors have been told they are losing their jobs and the scheme has admitted making operational changes ‘in order to become more cost-effective’.
“They have said, in a statement to the RLA, that ‘this is drastic action but prudent steps had to be taken now to avoid financial problems later’.
“We are told that, because external contracts are being terminated, adjudications will now be completed in-house. This has been blamed on the huge and continually growing number of disputes referred to the scheme which has led to a complete review of the business model in order to contain costs.
“The Dispute Service says it feels that any effect on performance indicators will be offset by the time and cost savings and by improvements to their general administrative procedures. But this still leaves unanswered questions that only an independent enquiry can address.”