A deposit protection service’s “deathbed conversion” to deposit-free renting and another’s decision to urge users to abandon insurance-backed tenancy deposit schemes has been described by one campaigner as “definite and decisive proof that the deposit establishment knows the game is up”
DPS managing director Julian Foster this week advised customers to switch their deposits to a custodial scheme – where a DPS holds deposit money on behalf of agents and landlords – to “reduce operational costs” ahead of the coming ban on letting agents fees.
The DPS boss argued that “custodial schemes provide landlords and tenants complete peace of mind over the security of their money”.
Deposit reform campaigner Ajay Jagota maintains a register of the total amount letting agents and landlords are convicted of stealing from insurance-backed tenancy deposit schemes each year – with convictions in 2017 on course to exceed the £1m stolen in 2016.
Fellow tenancy deposit protection service TDS has also announced that they are forming a partnership with new deposit replacement insurance firm Zero Deposit.
The TDS will provide dispute resolution services to the business, which it has also invested in and on which it will have a seat on the board of directors.
Ajay Jagota, managing director of deposit replacement insurance solution Dlighted responded the news.
Dlighted offers landlords an effective deposit replacement insurance alternative to the cash Tenancy Deposit schemes TDS, DPS and Mydeposits.
The scheme gives property owners £500,000 of asset protection, a rent guarantee and free legal support. Tenants benefit from significantly lower move-in costs and from 24-7 365 day a year maintenance and repairs, overseen by an independent company.
“Taken together these bits of news are definitive and decisive proof that the deposit establishment knows the game is up.
“I welcome the DPS’ unspoken admission that insurance tenancy deposit schemes are unsustainable and indefensible. I can’t interpret their actions as anything other than them waving the white flag and preparing for the end the insurance model.
“Not only is this model an insurance policy that doesn’t actually insure anyone, we have seem time and time again how easy it is for for crooked agents and landlords to misappropriate and steal tenants deposits from this “insurance” scheme
“I also welcome the TDS’ apparent deathbed conversion to deposit-free renting. However, their involvement makes me question quite how revolutionary this new venture is.
“At first glance many of the shortcomings of the traditional deposit protection scheme system remain in place, not least the retention of and reliance on an old-fashioned dispute resolution service.
“As a landlord and letting agent one of the primary reasons I set out to do things differently was the simple fact that this process often takes many months to resolve.
“That delay leave landlords out of pocket and in some cases unable to carry out vital repairs, and as a result unable to rent out their properties.
“I genuinely welcome the competition, but I can’t help having the suspicion that this is the equivalent of slapping a spoiler on an old banger and claiming it’s a supercar”.