As From 6th April 2007 all Landlords and Letting Agents taking deposits for Assured Shorthold Tenancies (AST’s) in England & Wales will be required to join a government accredited deposit protection Scheme. This will safeguard all the deposits landlords and agents take. This legislation forms part of the Housing Act 2004.

Dilapidation Deposits

A security deposit of a minimum of one month’s rental plus £100.00 and usually a maximum of one and a half month’s rent is held in reserve from the tenants. This is retained by us (or by the Landlord if this is agreed by all parties in advance) until we are satisfied that your property has been maintained in a satisfactory condition, although fair wear and tear must be taken into account.

It is true that legislation dictates that all deposits taken have to be covered by the terms and conditions as laid out in the housing act which outlines how any disputes between landlords and tenants are to be dealt with. The culmination of this process is where any amount of deposit that is disputed is sent to the TDS administrators and then both the landlord and tenant complete lengthy forms effectively putting forward their case. The arbitrator would then make a decision upon how the deposit dispute should be settled. Obviously form a landlord point of view once the process is moved into he hands of an impartial third party all control is lost. Indeed even if the tenant does not contest the level of deduction unless he/she actively defends her position via TDS or confirms to the landlord or his agent that he/she agrees to the deductions being made then the disputed amount may not be paid.

But we are pleased to confirm that we have a solution via FCC Paragon and it is our view that this will be the future for tenancy deposits.

   Smart Deposit Solution

A zero deposit option for tenants, a smart option for landlords…

What is Smart Deposit Solution?

FCC Paragon has recognized the potential problems for both landlords and tenants when it comes to deposits on rental properties. With more and more legislation which landlords have to adhere to for holding tenant deposits and the increasing cost of living which may mean tenants cannot afford the upfront cost of a deposit, we thought it was about time something changed! This is why we developed smart deposit. Smart Deposit is a warranty product which benefits both the landlord and the tenant. It allows the tenant to move into a property without having to find a large, sometimes unaffordable upfront sum and it covers the landlord for damage to the property and unpaid rental without them having to worry about holding a tenants deposit.

Available for tenancies with rental amounts of up to £2100 per calendar month.

How does it work?

Once all tenants have successfully passed our full referencing process, they pay a one off fee to FCC Paragon for the smart deposit solution, this avoids them having to pay a deposit.

We then provide the landlord with a smart deposit warranty which covers them for any damage made to the property on vacation of the tenant(s) (Up to a maximum of 2 months rental value will be provided for damage cover). The landlord also has cover for the last months rental amount * should the tenant leave the property owing the last month’s rent. (Up to a maximum of 1 months rental cover). This means that should the tenant damage the property, at the end of the tenancy the landlord can claim up to 2 months rent value in damages, or should the tenant not damage the property but move out owing the last month’s rent, then the landlord can claim for that last month’s rent. Or a combination of the both, if in the very unfortunate instance that the tenant does not pay the last month’s rent and damages the property, the landlord can claim 1 month rental value for damage cover and 1 month rental value for unpaid rental cover.

Benefits to landlords

Landlords can attract a wider range of tenants by not having to ask them to provide a deposit

Landlords do not have to worry about holding a tenants deposit in a costly national scheme

Landlords have damage (Dilapidations) cover for up to 2 months rental value. The normal deposit taken from a tenant is between 4 and 6 weeks rent, so the landlord actually has increased protection using smart deposit

Smart deposit covers the landlord if the tenant vacates the property without paying the last month’s rental (or a proportion of it) as well as covering damage costs

If a claim is accepted, smart deposit process payment within a 14 day period so the landlord doesn’t have to wait too long. This may not be the case if requesting tenants deposit out of a national scheme.

Types of Scheme.

There are two types of scheme – A Single Custodial Scheme run by the Deposit Protection Service and at the moment two insurance based schemes run by a) The Dispute Service and b) My Deposit. The difference between a custodial scheme and an insurance based scheme is straight forward.

With the Custodial Scheme it is free for Landlords to register, but they do not hold on to the deposit themselves, they hand it over to the administrators. With the Insurance Based Schemes, after registration and the payment of the relevant fee, Landlords may hold on to all deposit money’s taken.

Crofters Property Services are members of the Dispute Service Scheme.

If Landlords wish to use our TDS Service we make an administration charge of £25.00 + VAT to cover the costs of the scheme.