TDS will employ'draconian'steps to keep going

News Category: Industry News

The new chairman of The Dispute Service – which runs the Tenancy Deposit Scheme – is to call on the Government to change the rules under which the deposit schemes have to work.

Negotiations are to start in October with Communities and Local Government as to whether TDS will renew its contract to provide tenancy deposit protection.

Professor Martin Partington made it clear that for the TDS to agree to a new contract, there would have to be major changes.

CLG will not permit tenancy deposit schemes to charge landlords or tenants for their dispute resolution services. It also believes that every agent should be charged a flat membership rate.

Partington said: “The TDS is operating in a CLG framework that is very difficult. The scheme is in a fix not of its own making.”

He went on: “It does seem to me that if we are still in business after the review of the contract with CLG, it is essential that we achieve a more rational model for charging, which includes giving incentives to agents who do some of their dispute resolution in-house, and at the same time putting extra loading on those who are making more than average use of the system.

“We want to reward people who cause less risk to the scheme rather than people who take a lot out of it.”

He said he was “anxious to ensure that there will be a publicly-defensible formula” and he warned: “In order to get over the financial crisis for this year, some draconian steps need to be taken just to keep the scheme afloat.”

At the moment, agents pay an average of £11.22 annually per tenancy.

Partington said that it was proving almost impossible to budget, as budgets had to be drawn up the previous autumn when it could not possibly be known how many tenancies there would be, or how many disputes.

“Frankly, we are budgeting on a wing and a prayer, having to make assumptions,” he said.

“The level of cases being brought last year was roughly twice what had been budgeted for.

“What we need is a base fee, and then agree what dispute level is viable within that base fee.” Agents with higher dispute volumes would then pay more on top.

While he accepted that agents had been furious over this year’s price hikes and the way they had been handled, he said that higher subscriptions had been inevitable: “Otherwise the scheme would have gone belly up – there is no doubt about that.”

Currently, by number of agency firms as opposed to the number of tenancies protected, 92% of members re-subscribed to the scheme after receiving their first invoices this spring. The second invoices are due out at the end of July, with payment to be made at the end of September.


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