All Agents has called on politicians to disband insurance-backed tenancy deposit schemes.
The estate agent review site claims the schemes are misleading, as tenants and landlords may find themselves in the precarious position of believing that their deposits are securely protected.
It says the “unfortunate reality” is that an agent could simply exit from the scheme, which would negate the deposit insurance and potentially leave deposits unprotected. 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.
It has been widely reported that some unscrupulous firms have used their tenants' deposit monies to assist with company cash flow or, in some cases, to fund luxurious lifestyles.
Whilst the changes in legislation have gone some way to providing additional security, regarding the safety of a tenant's deposit money, there are further steps that can be enforced. All Agents says the deposits paid by tenants, should not be subject to such jeopardy and as robust a system as possible should be in place to ensure the safety of these funds.
Michelle Hodge of All Agents said: "The custodial Tenancy Deposit Scheme (TDS), which is mandatory in Scotland, is the only way of truly safeguarding tenant deposit funds from any such dangers."
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.