The Deposit Protection Service (The DPS) is celebrating a decade of custodial deposit protection this week as it marks the 10th anniversary of its creation.
When renting out a property, most landlords and letting agents choose to take a deposit from the tenant prior to the tenancy starting. The deposit gives a level of protection to landlords and means that should the tenant breach the terms of the tenancy agreement, such as causing damage or not paying rent, the landlord can then make appropriate deductions from the deposit.
But to help provide security and peace of mind to both landlords and renters during the course of tenancies, the government included measures in the 2004 Housing Act that ensured that deposits must be protected by a third-party.
Deposits taken on assured shorthold tenancies in England and Wales by landlords or letting agents must be protected within 30 days in any one of three government-backed insurance based or custodial deposit protection schemes operated by MyDeposits, the DPS and the Tenancy Deposit Scheme (TDS).
When the legislation was implemented on 6 April 2007, the DPS offered England and Wales’ only custodial scheme – where deposits are securely looked after rather than retained by a landlord – and over the last 10 years has protected over 4.9 million deposits.
Yolanda Garrett, associate partner at Statons estate agents, said: "It’s been a fascinating 10 years for the rental sector and The DPS has played a massive role in driving up standards and improving the experiences of renters, agents and landlords."
The custodial scheme allows landlords or agents to hand over the deposit for protection during the tenancy, with no fees attached. The scheme is funded entirely from the interest earned from the deposit pool.
The insurance product enables landlords or agents to retain the deposit during the tenancy but in return pay a protection fee to the scheme.
Julian Foster, managing director at The DPS, commented: “Over the last decade, millions of landlords and tenants have relied on us as the UK’s longest-running custodial scheme for security, peace of mind and the guarantee of fairness when tenancies come to an end.
“This accomplishment is largely down to the hard work and great skills of the diverse team we have, whether it’s our highly-rated contact centre, our adjudicators or our education and training teams.
“The next decade promises to be even more exciting, with digital developments promising an even easier and rewarding process for letting agents, landlords and tenants.”