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Reforming the deposit system offers no greater protection, says mydeposits boss


However, Hooker says that since the introduction of tenancy deposit protection schemes 12 years ago, operators, including mydeposits, Deposit Protection Service (DPS) and the Tenancy Deposit Scheme (TDS) have consistently delivered a good service for the majority of tenants.


He said: “Whilst I recognise that the systems and processes of deposit protection may need updating to deal with today’s rental market, having carried out extensive research I do not believe that overhauling the current system in favour of, for example, no deposit insurance alternatives, offers any greater protection for tenants.”

Hooker accepts that there is an affordability issue for tenants, particularly those in London, and believes this is an issue that must be addressed. 

However, purchasing an insurance policy which reimburses a landlord if the tenant cannot or will not pay any losses, simply buys the tenant out of having to pay a deposit and could place tenants is a worse situation some years down the line, in his view.

Hooker added: “Ultimately, tenants are still liable for recompense to an insurance company which many tenants simply do not realise.

“The fees/premiums charged over a 10-year renting period, could end up costing the tenant £6,000-£7,000 for nothing. What many don’t understand is that deposits are refundable if the tenant abides by the terms of the tenancy agreement. Insurance premiums are not.

“Any change to the current TDP system should recognise and embrace the existing benefits, such as Alternative Dispute Resolution, but be enhanced. 

“Options such as deposit loans, custodial only schemes or deposit passporting could address affordability issues and offer tenants greater control, while continuing to give landlords the confidence to remain in the buy-to-let market.”

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    As I said in an earlier similar article, I wouldn't want to rent to tenants who aren't confident they will hand my properties back as they found them. As the article says, deposits are refundable. Insurance premiums aren't. These insurance schemes are the next generation ppi scams.

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    In my opinion insurance schemes aren't likely to provide the same level of incentive to tenants to look after the properties they're renting. They'll never receive the money back and in any event the they'll consider that the landlord is covered by the insurance if they do neglect or willfully damage the property. Whereas if you've a significant sum of your own money at stake you're likely to do what it takes to ensure you get it back.

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    add a bit on all rents to cover damage, good tenants will be subsidizing bad tenants, not fair? well that's the way government seem to want it, so much for government looking after the tenants interests.

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    Throughout our society, the "good" subsidise the bad. Much more use should be made of giving those who are "bad" or even rent defaulters etc. unpaid labour - picking up litter, painting public buildings etc to at least get some payback and act as a disincentive to the lazy and feckless and a possible way into paid work for the unfortunate or misled potentially "good" among them.


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