New Tenancy Deposit Schemes....

franklee

Hmmm, the Deposit Protection Service is funded from the interest on the deposit and yet the deposit is returned WITH interest. How do they manage that? (Still if it means the tenant getting interest on the returned deposit that's an improvement to now when the interest disappears into the agent's grubby mitts or does it now go to the landlord's?).

"Example 1

* A tenant pays a deposit of £700.
* At the end of the tenancy, the landlord says he wishes to keep
* £50 to pay for cleaning the flat.
* The tenant agrees.
* £650 (plus interest) is returned to the tenant and £50
* (plus interest) is returned to the landlord."

clutton_2

""How do they manage that?""

the landlord pays

£47 to join the scheme - £26 per year per deposit held in the scheme - and a annual renewal of £17


""interest" is returned to the landlord."" - no - see above

franklee

clutton wrote:

""How do they manage that?""

the landlord pays

£47 to join the scheme - £26 per year per deposit held in the scheme - and a annual renewal of £17

I'm talking about the The Deposit Protection Service which has just been identified in this thread as free specifically the website says:

"The Deposit Protection Service (The DPS) is a tenancy deposit protection scheme accredited by the Government. It is provided free of charge, and funded entirely by the interest earned from deposits held in the scheme."

And yet it also says the deposit interest will be refunded:

"Example 1

* A tenant pays a deposit of £700.
* At the end of the tenancy, the landlord says he wishes to keep
* £50 to pay for cleaning the flat.
* The tenant agrees.
* £650 (plus interest) is returned to the tenant and £50
* (plus interest) is returned to the landlord."

Hence asking how they can both use the deposit interest to fund the scheme and refund interest. Depends on the interest rate used for the refund I suppose. Still even a low rate is better than tenants now get (0).

clutton wrote:

""interest" is returned to the landlord."" - no - see above

No I meant if using an agency who normally gets the deposit interest at the moment, i.e. now, before the new schemes come in? I only know it's not the tenant. If the agent normally keeps the interest and they lose that then I suspect we will see an increase in agent's charges.

peter999

scrummy_mummy wrote: »

Does a completely free scheme exist?
If so where?

Tenancy Deposit Protection Scheme
http://www.direct.gov.uk/en/TenancyDeposit/index.htm

"From 6 April 2007, all deposits taken by landlords and letting agents must be protected by a government-authorised tenancy deposit protection scheme"

The Deposit Protection Service
http://www.depositprotection.com/Unrestricted/Default.aspx?bhjs=1&fla=1

The Deposit Protection Service (The DPS) provides the only free scheme and is open to all landlords and letting agents.

peter999

barnaby-bear

scrummy_mummy wrote: »

It's going to cost a private LL £30 per deposit 'lodged' (and £20 per transaction lodged by an agent plus a little bit for themselves obviously) ...how many LL/agents are going to pass this cost on? What happens if a tenant can't pay and the LL won't???.

My last deposit was 1.5xrent and around £1400 - over the 2 years it was held even the most mediocre of interest rates would cover initial charges, of course I got no interest.

Guy_Montag

franklee wrote: »

Hmmm, the Deposit Protection Service is funded from the interest on the deposit and yet the deposit is returned WITH interest. How do they manage that? (Still if it means the tenant getting interest on the returned deposit that's an improvement to now when the interest disappears into the agent's grubby mitts or does it now go to the landlord's?).

"Example 1

* A tenant pays a deposit of £700.
* At the end of the tenancy, the landlord says he wishes to keep
* £50 to pay for cleaning the flat.
* The tenant agrees.
* £650 (plus interest) is returned to the tenant and £50
* (plus interest) is returned to the landlord."

I think you get interest of something like 2% under the BoE rate. So that 2% is used fund the administration. Which off the top of my head would mean that if all deposits were held in that scheme would mean £14m.