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Tuesday, June 08, 2010

TDS which scheme?

I was recently contacted by one of Property Hawk's users asking which one of the Government approved Tenancy Deposit Scheme (TDS) should he use?

I have to be honest I have not used either of the insurance backed schemes:

My Deposits
The Tenancy Deposit Scheme

This is because both require a charge to join the scheme and then rely on the landlord paying an insurance fee to protect each deposit. The advantage to a landlord of doing this is that they then can retain the tenancy deposit and potentially invest the monies and earn interest. In theory this could more than pay for the cost of taking out the insurance especially when a landlord takes a large deposit. However, with interest rates on the floor. Clearly a landlord is making diddly squat in interest. In my view I can't see any advantages to a landlord of using them in the current low interest environment.

The other government approved scheme which I do use is the custodial scheme run by the Deposit Protection Service.

This scheme is FREE to landlords to use & where the Bank of England base rate is above 2.32% would also return a small rate of interest to the landlord if their Tenancy Agreement allowed.

To me it's a 'no brainer'.

I'd go with the FREE Deposit Protection Service.

Has anybody used the insurance backed schemes & why would you use them? To date I've not heard a convincing argument for them but I'm open to changing my view.

Other useful articles:

TDS - repaying the tenants deposit
TDS - adjudication success rates
Tenancy Deposits - the arbitrators view
Tenancy Deposits - which scheme?

Landlord insurance

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