Call to scrap insurance-backed deposit schemes

AllAgents is calling for the scrapping of the insurance-backed tenancy deposit schemes.

The review website claims these schemes are misleading, as tenants and landlords may find themselves in the precarious position of believing their deposits are securely protected. 

“The unfortunate reality is that an agent could simply exit from the scheme, which would negate the deposit insurance and potentially leave deposits unprotected - or even worse, an agent could go out of business, meaning the likely loss of any deposit funds that the agent may have held on behalf of their landlords” says AllAgents spokeswoman Michelle Hodge.

She says that recent changes in legislation have gone some way to providing additional security but more progress is required 

"The custodial Tenancy Deposit Scheme, which is mandatory in Scotland, is the only way of truly safeguarding tenant deposit funds from any such dangers" says Hodge.

She says this system also provides agents with the flexibility to move between scheme providers and allows landlords the flexibility of moving between agents, whilst protecting the deposit funds within the security of a third party bank account at all times.

Hodge says whatever the result of the election this week, a new government should scrap the insurance-backed schemes and move towards a Scottish-style regime.