More than one third of UK landlords are still unaware of the Tenancy Deposit Scheme (TDS), according to an independent survey commissioned by The Money Centre.
The findings mean that many landlords could find themselves committing a civil offence and being forced to pay a tenant three times the amount of the deposit, as well as losing their automatic right to regain possession of the property at the end of a tenancy agreement.
The survey,* conducted in August and September of last year, found that 36 per cent of landlords questioned were unaware of the Tenancy Deposit Scheme. Introduced by the government on April 6, 2007, the scheme is designed to protect tenancy deposits and provide a fairer system for settling disputes on the return of a deposit at the end of a tenancy. When it comes to investors with only
one buy to let property, this figure was even higher, with 43 per cent unaware of the scheme. A further 20 per cent of respondents said they were aware of the scheme but did not fully understand it, leaving less than half (44 per cent) who said they were aware of the scheme and understood it.
Lynsey Sweales, marketing and PR director of The Money Centre, commented: “We are very worried by the results of this research, which shows low awareness and understanding of the existence of this legislation and its implications, several months on from its introduction. This is bad news for both tenants and landlords as the scheme is designed to protect both.”
The research also found that 55 per cent of landlords have had to withhold all or part of a tenant's deposit to cover property damage and other costs (such as cleaning costs and unpaid utility bills) at some stage. Therefore, it may not be long before problems arise due to a lack of participation in the scheme, and if a landlord or agent does not protect a tenant's deposit, they can be ordered by the local county court to pay the tenant three times the amount of the deposit.
“The Money Centre would like to see the government renew its publicity drive about the scheme, to ensure awareness, understanding and participation in the scheme is improved,” says Lynsey.
“We also urge landlords who are not up to speed with the Tenancy Deposit Scheme to do their research immediately and advise them to join their local landlords' association. These organisations provide advice and guidance to their members on changes in legislation and can act as a forum to share best practice.”
With the past year's speculation about the buy to let market, landlords have had many issues to deal with in order to make the most of their investments, so joining a landlords' association to protect and promote their interests is now more important than ever. However, it is estimated that only around four per cent of the UK 's 750,000 landlords are currently members of a landlords' association.**
The findings have not shown a vast improvement over time. The research conducted in August/September showed only a marginal increase (one per cent) in awareness of the Tenancy Deposit Scheme since previous research carried out in May – in which 37 per cent of respondents said they were unaware of the scheme. Comprehension of the scheme has improved, with 44 per cent of respondents saying they were aware of the scheme and understood it (up from 36 per cent in May) and 20 per cent saying they were aware of the scheme but didn't fully understand it (down from 27 per cent in May).
While the Tenancy Deposit Scheme only covers tenancy agreements made on or after April 6, 2007, as time goes on and tenancy agreements are renewed and changed, all landlords will eventually become affected. It is therefore vital that landlords take the time to understand the TDS now and avoid being ignorant of the law.
* Research was undertaken by independent research agency BDRC between August 17 and September 6, 2007, on behalf of a syndicate of buy to let mortgage lenders and brokers, during which 523 online interviews with residential property investors were conducted.
** Source: Estimation by The Money Centre, found by adding the membership figures of landlord associations together.
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