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Business Transfers

New law concerns property inventory

I would like to make all readers aware....

From 6 April 2007, the Tenant Deposit Scheme (TDS), the last majorprovision of the 2004 Housing Act Part 6 will come into force inEngland and Wales. The scheme is to provide protection to both tenants and landlords in the private rented sector. Tenancy deposit protection will be required by law to safeguard any deposit paid by a tenant under an Assured Shorthold Tenancy for all new tenancies. According to government statistics, 19% of deposits are only part returned, 11% are not returned at all and 17% of tenants who had deposits withheld felt it was unjustified.

As from 6 April it will be a legal requirement for every landlord to be a member of a scheme, either insurance based or the custodial scheme. The Tenancy Dispute Services Ltd has been appointed by the government to run an insurance-based scheme. This will be open to all Landlords and Letting Agents, whether or not they are regulated by the Association of Residential Letting Agents, National Associations of Estate Agents or the Royal Institution of Chartered Surveyors.

Under the insurance based scheme the landlord will hold the deposit for the term length and only if a dispute arises will the deposit be transferred to a central fund. However, under a custodial scheme the deposit will be automatically transferred into a central fund at the beginning of the tenancy.

With regard to how the two schemes are funded, the insurance based schemes will involve the landlords and letting agents paying an annual membership fee, while the custodial scheme will be funded by the interest earned from the deposits held.

Although membership to a scheme is compulsory for all landlords and letting agents who intend to hold deposits, what remains to be seen is whether this will be a success in the long run.

stocktaking in progress

Neil Ashby - Company Director