Deposit protection query

Mrs_pbradley936

I need a bit of advice concerning deposit protection insurance. Our agents have recently added this to our bill (we are landlords not tenants). My husband thinks that because we are not holding the deposit we do not have to insure against losing it. Is he right? In other words it is the agents expense rather than ours.

Your thoughts/advice/comments welcomed because I cannot find the answer online.

Werdnal

Do you know what deposit protection scheme they are using?

When we let through an agent they used the Deposit Protection Service, which is completely free. Now I let myself I also use them.

Some agents however, use insurance based protection services, where the actual money for the deposit is not sent to anyone, they just take a policy to cover it. This sounds like what you may have been charged for.

TBH its up to your agents, as they can basically charge what they like for what they do - not illegal, but perhaps sometimes immoral!

Ask them what the fee covers (you wouldn't pay for anything anywhere else without asking for a breakdown of the cost would you?). Also ask why they are not using the free DPS service!

Mrs_pbradley936

Werdnal wrote: »

Do you know what deposit protection scheme they are using?

When we let through an agent they used the Deposit Protection Service, which is completely free. Now I let myself I also use them.

Some agents however, use insurance based protection services, where the actual money for the deposit is not sent to anyone, they just take a policy to cover it. This sounds like what you may have been charged for.

TBH its up to your agents, as they can basically charge what they like for what they do - not illegal, but perhaps sometimes immoral!

Ask them what the fee covers (you wouldn't pay for anything anywhere else without asking for a breakdown of the cost would you?). Also ask why they are not using the free DPS service!

They use the insurance based one and not the free one because with the free one you have to give the deposit money to the scheme. This way they keep all the deposit money in a client account and it must be a lot if it is say £500 from every place they let. My husband's point was that we are not holding the deposit they are so they should be paying the fee.

Werdnal

But you are employing them to look after your let, so this cost applies to that service. They do not even have to take a deposit from tenants unless the LL stipulates it, so you are liable for the cost of protecting it. Some agents may "absorb" it, but many would charge their client, ie you!

If you want free protection, ask them for the deposit and protect it yourself via the DPS like I do. After all, the LL is ultimately responsible for the return of the deposit when the tenant leaves, even if the LA took and protected it in the first place. Infact, if the LA goes bust (as has happened in other posts here), you may not even be able to recover the deposit if it is in an insurance based scheme anyway!

may_fair

Mrs_pbradley936 wrote: »

They use the insurance based one and not the free one because with the free one you have to give the deposit money to the scheme. This way they keep all the deposit money in a client account and it must be a lot if it is say £500 from every place they let.

But they have to pay fees to the scheme provider if they use an insurance-based scheme. Look in your agency contract to see what charges you agreed to pay.

My husband thinks that because we are not holding the deposit we do not have to insure against losing it. Is he right? In other words it is the agents expense rather than ours.

I don't think your husband quite understands the nature of a tenancy deposit or the requirements of deposit protection for an assured shorthold tenancy in England/Wales.

Firstly, the LL is ultimately liable for protecting the deposit.

Secondly, the deposit belongs to the T so it's not the LL's to 'lose'. The insurance aspect is there to cover the scenario when the landlord doesn't pay up, not the tenant.

The agent acts on the LL's behalf, like a third limb of the LL, and acts purely on the LL's instructions. If you don't want the agent to use the insurance based scheme, just tell them so, and that you'd rather take care of it yourself.

G_M

The agent works for you, as Mayfair says. YOU tell THEM what to do, how to protect the deposit, whether to insure it, what rent to charge the tenant, when to inspect the property, what to do about repairs /maintenance etc etc etc

and etc.

The agent does not tell you.

jjlandlord

Mrs_pbradley936 wrote: »

They use the insurance based one and not the free one because with the free one you have to give the deposit money to the scheme. This way they keep all the deposit money in a client account and it must be a lot if it is say £500 from every place they let.

I hope that you understand that what they want to do is to keep the deposit money, which benefits their finances, including earning interests, while charging you for the privilege.

In addition, you should also understand that if the agent keeps the deposit and the money is not securely kept in a customers account then if the agent goes under you will have to pay the deposit back to the tenant out of your own pocket.

Follow the wise advice of may_fair and G_M.