DPS offers an insurance alternative

I have just had a new tenant move in this week so it's been an opportune time to reconsider how I deal with the tenants deposit.  In the past I have opted for the Deposit Protection Scheme's custodial scheme.  From the 2nd April it is now possible for me to use the Deposit Protection's Scheme new insurance scheme.  This will allow me to keep the deposit.  In return it will cost me an insurance fee.  However, the new scheme will not unlike the other insurance based schemes require me to pay an annual or registration fee.  The costs of the scheme compares favourably with the other insurance based deposit schemes.

Advantages of the insurance backed deposit scheme

However, is there any real advantage to using an insurance scheme?  In my view not at the moment with interest rates so low holding a tenants deposit will earn landlords 'nothing'.  Both schemes are subject to the same style of Alternative Dispute Resolution should the tenant contest any retention of the deposit by the landlord.

The costs of the insurance scheme?

After digging about a bit it transpires that the cost for the insurance scheme is £15 per deposit below £500 and £22.50 for deposits that are protected for £500 and above.  Not an awful lot but still without the benefits of earning any significant interest I'm still not persuaded.  When interest rates hit 10% again maybe but for now I'm happy to stick with the DPS' custodial scheme.

 Landlord insurance - professional rates