Could tenancy deposit schemes become a thing of the past?

This week saw a deposit protection service covert to deposit-free renting, with another urging users to abandon insurance-backed tenancy deposit schemes.

Managing Director of the Deposit Protection Scheme (DPS), Julian Foster, this week advised customers to move their deposits to a custodial scheme. This is where DPS holds deposit money on behalf of agents and landlords in order to reduce operational costs, something that will prove important ahead of the impending ban on agent fees.

Mr Foster claims that ‘custodial schemes provide landlords and tenants with complete peace of mind over the security of their money.’


Another tenancy deposit protection service, TDS, has also moved to announce that they are forming a partnership with new deposit replacement insurance firm Zero Deposit. The TDS will then provide deposit resolution services to the business, which it has invested in and subsequently will have a seat on their board of directors.

North Eased-based deposit reform campaigner Ajay Jagota described this as a ‘deathbed conversion’ and a, ‘definite and decisive proof that the deposit establishment knows the game is up.’

Mr Jagota maintains a register of the total amount letting agents and landlords are convicted of stealing from insurance-based tenancy deposit schemes. Convictions this year are on course to exceed the £1m stolen during 2016.

Jagota, Managing Director of Deposit Replacement Insurance solution, Dlighted, said: ‘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.’[1]

Could tenancy deposit schemes become a thing of the past?

Could tenancy deposit schemes become a thing of the past?


Continuing, Mr Jagota noted: ‘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.’[2]




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