At the insistence of their insurers, The Tenancy Deposit Scheme will only provide deposit protection and alternative dispute resolution to letting agents who are members of recognised professional bodies.
From 6 April 2009, only regulated letting agents and corporate and individual landlords will be covered by the Tenancy Deposit Scheme and cover will be withdrawn from unregulated agents.
Tenants are being advised to ensure their landlords have made alternative arrangements to safeguard deposits as soon as possible.
The Scheme advises landlords and tenants to be certain that their lettings agents are members of either the Association of Residential Letting Agents (ARLA), The National Approved Letting Scheme (NALS), the National Association of Estate Agents (NAEA), or the Royal Institution of Chartered Surveyors (RICS).
Alternatively deposits should be protected under one of the other government authorised deposit protection schemes - Tenancy Deposit Solutions (trading as mydeposits.com) or The Deposit Protection Service.
The Tenancy Deposit Scheme is writing to all current tenants whose tenancy is shown to have been arranged through an unregulated agent to advise them of the change in protection that can be offered and the course of action to take to ensure protection as the law requires.
The agents concerned should advise their tenants and landlords of what they intend to do on their behalf.
In a statement The Tenancy Deposit Scheme said it regretted the action it has been forced to take, but points out that it is due to circumstances that are well beyond its control.
Caroline Pickering, NALS Independent Chair, said: “The TDS decision highlights the importance placed on both accountability and financial security within private rentals.
“Lettings firms need to guarantee optimum levels of trust and support for both tenants and landlords. This recent development will surely come as a wake-up call to all firms who are not part of any regulatory body and can not demonstrate to the consumer that they meet industry standards in the operation of their businesses.
“It is understandable that insurers are not willing to insure firms where there is no knowledge or controls of their accounting practices. This move coupled with the Rugg Report recommendations on licensing for letting agents, makes it clear to Government that the time has come to take action in establishing a licensing body and NALS is the obvious choice to assume the role.
“The answer for agents is simple, accreditation. NALS is the only Government recognised accreditation scheme for lettings and management agents in the private rented sector and offers consumers a benchmark of what to look for when considering the services of lettings agents.
“Agents must act now, the NALS criteria for entry to its scheme is entirely achievable by all professional firms and agents and we are here to assist firms through the application process.”
