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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